EFFECT OF CORPORATE GOVERNANCE AND RISK MANAGEMENT ON THE FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

Abstract

This paper has discussed the relationship between corporate governance and risk management and the financial performance of Nigerian manufacturing companies using the following variables: Board Regulatory Compliance (BRC), Board Stakeholder Engagement (BSE), Insurance Coverage Ratio (ICR), and Research and Development Intensity (RDI). The secondary data were gathered on 10 manufacturing companies between the years 2014 and 2023, and the regression models were used, and the Q of Tobin as the dependent variable. Results showed that corporate governance and risk management had a tremendous impact on financial performance. In particular, BRC, BSE, and ICR had a positive and significant effect on financial performance, and RDI had a positive but insignificant effect. The size of firms was also a positive factor in influencing financial performance, which underscores the importance of economies of scale and high access to resources available to the larger firms. The research has highlighted that sound corporate governance systems and risk management systems are essential in the maintenance of financial performance in light of the financial challenges in Nigeria. It also addressed a significant gap in the literature and thus offered an insight into the role of governance and risk management in the manufacturing sector of an emerging economy. The results provided viable guidelines to the policy makers and corporate executives to adopt combined strategies for governance and risk management in order to achieve resilience and competitiveness. The research helped to add to the existing literature on corporate governance and financial outcomes, especially in the case of Nigeria, and emphasized the role of more focus on innovation and risk management strategies to reach long-term sustainability.