Effect of Board Governance Mechanisms on Firm Performance: A Comparative Analysis of Listed Industrial and Consumer Goods Companies in Nigeria

Abstract

Research on corporate governance and firm performance in Nigerian industrial and consumer goods companies remains sector-specific, leaving the influence of board governance mechanisms unclear. This study examined how board governance mechanisms affect firm performance by conducting a comparative analysis of listed industrial and consumer goods companies in Nigeria. It examined the influence of board size (BOS), number of Number of board meetings (NBM), audit committee effectiveness (ADC), CEO duality (POD), and firm size (LOGTA) on performance measured by Return on Equity (ROE) and Tobin’s Q. Secondary data were utilized and sourced from the annual financial reports of the thirteen sampled consumer and industrial goods companies for a fourteen-year period from 2012 to 2025. Descriptive statistics, panel unit root tests, correlation analysis, and fixed-effects and random-effects regression techniques were used for analysis. Correlation analysis showed board size was positively and significantly related to ROE (r = 0.5631) and Tobin’s Q (r = 0.4542) among consumer goods companies. For industrial goods companies, ROE and Tobin’s Q were strongly correlated (r = 0.7134). Regression results indicated ADC positively affected ROE (β = 1.55919, p < 0.05) for consumer goods companies, while BOS positively influenced ROE (β = 11.94660, p < 0.05) for industrial goods companies. BOS also positively affected Tobin’s Q in both sectors. Board governance mechanisms significantly influence firm performance in Nigeria, but the effects vary by sector. The study recommends optimal board size, stronger audit committee independence, reduced CEO duality, and industry-specific governance policies to enhance performance and investor confidence.