Corporate Governance-Firm Performance Relationship: Empirical Evidence from African Countries. A Principal Components Analysis

Olaniyan S. Olajide, Soetan R. Funmi, Olabiyi Kehinde A


This study investigated the relationship between corporate governance and firm performance, with evidence from Africa countries. The review of empirical studies from African countries had established a relationship between corporate governance and firm performance without consensus on a particular kind of relationship; while the result of the analysis using data on the return on assets, returns on equity, price earnings ratio, Tobin’s Q and constructed Performance Index as measures of firm performance and ownership structure as a measure of corporate governance revealed that corporate governance has a positive significant relationship with firm performance in Nigeria. The study concluded that though the agency costs of firms are very high, sound corporate governance is usually responsible for the positive performance of firms across African countries.

Keywords: Corporate Governance, Agency theory, Firm Performance.

DOI: 10.7176/EJBM/12-17-07

Publication date:June 30th 2020

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