Factors Affecting Financial Decisions and Corporate Governance Structure of Commercial Banks in Nigeria

Abstract

The main purpose of this study is to ascertain factors affecting financial decisions and corporate governance structure of commercial banks in Nigeria.  Both primary and secondary data were used. 20 commercial banks that operated during 2000-2013 period constitute the sampling frame. In analyzing the data, descriptive statistics such as mean, standard deviation, minimum and maximum and correlation analysis were employed.  The results show that linear and positive association exists between debt ratio and board size (r = 0.46). This implies that finance decisions of banks were correlated with their corporate governance structure. However, the correlation between debt to equity ratio and board size is negative (r = -0.33), implying that inverse association exist between the two variables.  Board composition is found to be positive and significantly related (r = 0.419) to earning per share of banks implying a high and direct relationship between governance structure and investment decision of banks.  It is against this background that these recommendations were made that banks should pay more attention to other financing decisions such as dividend and liquidity in order to keep the banks at high level of performance which is crucial to their sustainability. Besides, commercial banks should reduce the number of individuals in their board if they desire to maintain or sustain a good level of performance as well as maintaining a good investment decisions for the overall performance of commercial banking institutions in Nigeria.

Keywords: Financial decision, Corporate governance structure, Commercial banks, Nigeria.