EFFECT OF CORPORATE GOVERNANCE ON THE FINANCIAL PERFORMANCE OF INSURANCE FIRMS IN NIGERIA

Abstract

The effect of the large-scale unethical practices as a result of Weak corporate governance due to weak internal control systems, absence of risk management processes, insider abuses and fraudu-lent practices leading to window dressing of financial statements remain a worrisome feature of the manufacturing sector. This study delves into the nuanced relationship between corporate govern-ance mechanisms and the financial performance of listed insurance firms in Nigeria. Through a comprehensive analysis of existing literature and empirical research, the study sheds light on the multifaceted nature of corporate governance in the Nigerian context. It explores how effective gov-ernance practices can mitigate risks, enhance operational efficiency, and foster sustainable growth within the insurance sector. The study employed ex-post facto research design. Data gathered for the purpose of this study were tested to establish the exact functional relationship between the vari-ables using E-view version. Due to the linearity nature of the model formulation, Ordinary Least Square (OLS) estimation method was employed in obtaining the numerical estimates of the coeffi-cients in the model using E-view. The findings of this study reveal suggests that insurance firms per-form better when the directors have equity ownership as it improves performance in ROA, ROE, and EPS of insurance firms in Nigeria. The study therefore recommends among other things that State periods for directors to hold a substantial portion of their wealth in the form of the company's equity, such as shares, as this will improve EPS and create long-term value for shareholders.