Corporate governance and equity value multiple : evidence from Nigerian listed firms

• Main Author: Isah, Shittu
• Format: Thesis
• Language: English; English
• Published: 2016
• Subjects: HC Economic History and Conditions; HD61 Risk Management
• Online Access: http://etd.uum.edu.my/7957/; https://sierra.uum.edu.my/record=b1698385~S1
• Institution: Universiti Utara Malaysia

The failure of corporate entities has continued to draw the attention of various stakeholders across the globe. As a result of this problem, different countries have issued Corporate Governance (CG) guidelines. Part of the objective of these guidelines is to improve firm values. In Nigeria, similar guidelines (known as the Codes of Corporate Governance) were issued for corporate organizations to align the country with the global best practice. However, researchers, investment analysts, and other stakeholders continue to argue whether those governance mechanisms increase the value of stockholders. Others recommend that firm governance practices should be considered before making investment decisions while others argue that governance practices are not important in Nigeria. In order to address the problem, this research empirically examined the effects of eight corporate governance variables on the equity value multiple (EVM) of Nigerian firms. The study used data of 100 firms listed on the Nigerian Stock Exchange (NSE) for the period of 2009-2013. The study used the Generalized Method of Moment (GMM) to estimate the regression due to the endogeneity problem among the variables. The study applied the Principal Component Analysis (PCA) method to generate equity value multiple from the four equity valuation multiples. The results reveal a significant positive relationship between board size, board independence, board gender diversity, audit committee independence, managerial shareholding, and disclosure of corporate governance information at 1% level of significance. This study contributes to the understanding of the governance-equity value relationship by examining some corporate governance variables. The results further provide an insight for practitioners and policy makers on the importance of corporate governance codes consideration towards investment decision in Nigeria. Therefore, the study recommends consideration of the above CG variables in making investment decision.