“Corporate governance and financial performance: an empirical analysis of selected multinational firms in Nigeria”

This study focused on corporate governance and performance of selected Nigerian multinational firms from 2012 to 2016. Specifically, the study focused on the effect of board size, activism and committee activism on return on asset and firm growth rate. Secondary data collected from four multinational firms were analyzed via static panel estimation techniques. While board size and board activism exerted significant negative impact on return on asset, committee activism exerted insignificant impact. The results of the study further showed that board size and board activism exert insignifi- cant negative impact on firm’s growth rate, while committee activism insignificantly spurs firm’s growth rate. Decisively, discoveries from this study reflect that corporate governance has significant negative impact on return on asset, but has insignificant influence on the growth rate of Nigerian multinational firms. Based on these findings, the authors recommended that corporate governance dynamics in firms world over should be reconsidered, such that it gives credence to more than just numbers of per- sons or meetings held, but the main reasons and deliberations in such meetings. It was also recommended that excessive increase in magnitude or frequency of meetings held by board of directors cum committee should be avoided.


INTRODUCTION
The need to ensure corporate structure that can sustain credibility in the management of stakeholders' resources, maintenance of effective communication, transparency and accountability is a crucial issue among corporate organizations around the world. This is mainly because corporate governance has over the years positioned the discourse of governance on the front line of corporate performance. Corporate governance is fundamental to corporate operations, because it is the binding glue between structural and fundamental wings that defines how an organization is being managed and directed towards optimality (Irine & Indah, 2017). Corporate governance connects to the composition of an organization in persons, ideology, business fundamentals and operation in the quest to ensure operational credibility, transparency and effective communication business ideals to stakeholders. It is principally a mechanism put in place to help harmonize the interest of business stakeholder with the dynamics of business dealing (Ajala, Amuda, & Arulogun, 2012).
As observed by Uwuigbe (2011), maintaining effective corporate governance has been given priority by firms in developed countries over time, while its importance has not been accorded to corporate governance or firms in emerging economies. In recent times, investigations on this subject matter in developing countries have become the pressing interest of scholars (see Irine Osundina, Olayinka, & Chukwuma, 2016). The tendency of a firm to survive the dynamics of business environment is to a greater extent influenced by the soundness of the components that defined the corporate governance of the organization, because corporate governance is fundamentally the corporate path through which the interrelation between the organization and society as whole can be put in the right perspectives, in order to foster optimum resources management and performance (Coleman & Nicholas, 2006).
There is a clear-cut interaction between corporate governance and organizational performance, as deficiency in effective and efficient governance system in any organization undoubtedly culminates into sub-optimality. According to Joe and Kechi (2011), the link between corporate governance and firms' performance stems from the fact that ineffectiveness of corporate governance reflects itself in form of the firm's inability to meet up with the demands and expectations of stakeholders due to the lack of mastery of the operational composition and system dynamics of the firm. The absence of well-defined corporate governance tends to be highly deleterious to the sustenance of high level of performance, because this is what orchestrates efficiency in the management of an organization, such that stakeholders can be certain of getting optimum return on their investment (Osundina, Olayinka, & Chukwuma, 2016).
Effective corporate governance is a drive that facilitates the establishment and adherence to modus operandi that will culminate into corporate accountability, standardized ethical dealings and operational transparency that herald appropriate resources handling. It is not an over-emphasis that corporate governance is keenly connected to the performance of an organization. This realization had led to quite a number of empirical investigations on corporate governance's role in sustaining the improved organizational performance.
In Nigeria, this debate has gained the attention of several scholars (see Osundina

DESCRIPTION OF DATA AND DATA SAMPLE
This study used secondary data that were sourced from the annual reports of 4 multinational firms.
The study spans from 2012 to 2016. The techniques used include descriptive statistics, correlation analysis and static panel regression analysis such as pooled, fixed effect and random effect estimation. Also, for consistency, efficiency and robustness check, post-estimation tests were also conducted.   Correlation results presented in Table 2 revealed that return on asset and firms growth rate move in the same direction with correlation coefficient of 0.261, also return on asset moves in opposite direction with both board size, board activism and committee activism, with corresponding correlation coefficient of -0.259, -0.364 and -0.465 respectively, while correlation between return on asset and firm's size is positive, with statistics of 0.411. Table 2 also indicates that firm's growth rate has a negative correlation with all the explanatory variables, except committee activism, and that there is positive correlation between pairs of explanatory variables used in the study, except committee activism and firm's size. Specifically, correlation coefficient reported in Table 2 Table 3 presents the estimation results showing the impact of corporate governance variables (board size, board activism and committee activism) on the performance of multinational firms sampled in the study, as measured in terms of return on asset and firm's growth rate, in the absence of heterogeneity effect. As reported in Table  3, board size, board activism exert significant negative impact on the performance of multinational firms sampled in the study, as measured in terms of return on asset, but insignificant impact on performance, measured in terms of firm's growth rate. Committee activism exerts insignificant negative impact on return on asset, while its influence on the firm's growth rate is positive and insignificant. Reported R-square stood at 0.602 for estimation of model 1 and 0.491 for model 2, which implies that about 60% and 50% of the systematic variation in return on asset and firm's growth rate, respectively, can be explained by variations in board size, board activism, committee activism and the firm's size. Table 4 represents estimation results showing the impact of corporate governance variables on return on asset and the firm's growth rate, when the firm's heterogeneity effect is taken into consideration and incorporated into the intercept term. As reported in Table 4, both board size and board activism exert significant negative impact on return on asset, but the impact on committee activism on return on asset is negative but insignificant. On the other hand, the impact of both board size and board activism on the firm's growth rate is negative but not significant, while committee activism exerts positive insignificant impact on the firm's growth rate.  Random effect estimation results represented in Table 5 revealed that when heterogeneity effects across multinational firms sampled in the study are incorporated into the error term, both board size, and board activism still exert significant negative impact on performance, measured in terms of return on asset. Committee activism exerts insignificant negative impact on return on asset. Table 5 revealed that both board size and board activism exert insignificant negative impact on firm's growth rate, while the impact of committee activism is positive but not significant. Reported R-square stood at 0.602 and 0.833 for model 1 and model 2, thus, showing that about 60% and 83% of the systematic variations in return on asset and the firm's growth rate can be explained by variations in board size, board activism, committee activism and the firm's size.  Post-estimation test result presented in Table 6 revealed that incorporating fixed effect into the intercept term of the model to track firm's heterogeneity effect among sampled multinational firms   Table 7 revealed that there is enough evidence to reject the null hypothesis that the difference between fixed effect and random estimation result is not significant for model 1, but otherwise for model 2. Thus, it stands to reason that the most consistent and efficient estimation for model 1 is the fixed effect estimation result presented in Table 4, while for model 2, the most consistent and efficient estimation result is the random effect estimation presented in Table 5. Hence, the basis for the discussion of the interaction between corporate governance variables and return on asset is the estimation result presented in Table 4, while interaction between corporate governance variables and the firm's growth is best discussed by the random effect estimation presented in Table 5.

Post-estimation test
Broadly, this study discovered from the fixed effect estimation result presented in Table 4 that board size exerts significant negative impact on return on asset, with coefficient estimate of -1.908 (p = 0.013 < 0.05), which connotes that an increase in the board size by an additional direction has the tendency of culminating into about 1.9% decline in the return on asset during that same period. The results also revealed that board activism measured in terms of the number of board meeting help per year has significant negative impact on return on asset, with coefficient estimate of -2.580 (p = 0.012 < 0.05), which reflects that an increase in the number of meetings held during a year by board members, by a unit, will engender about 2.58% decline in return on asset.
Reported coefficient estimates of -0.406 (p = 0.294 > 0.05) revealed that though an increase in the number of committee meetings held during a year has the tendency of culminating into reduced return on asset, such negative influence is not statistically significant, as a unit increase in the number of committee meetings will only decline the return on asset by 0.41%. It was also discovered in the study, that board size exerts insignificant negative impact on the firm's growth rate to the tune of -2.037 (p = 0.094 > 0.05), which implies that an increase in the board members by a person, has the tendency of reducing the firm's growth rate by about 2%. The result of the study also showed that an increase in board meetings, being a measure of board activism, will insignificantly reduce the firm's growth rate by about 2.2% (p = 0.475 > 0.05). On the other hand, the results showed that an increase in committee activism, as measured in terms of the number of committee meetings held, has the capacity to spur the firm's growth rate, though insignificantly 1.051 (p = 0.232 > 0.05), i.e. an additional committee meeting during a fiscal year can culminate into 1.1% increase in the firm's growth rate. In a nutshell, the study discovered that an increase in board size and the number of board meetings held within a year negatively affects the performance of multinational firms.
Precisely, more board sizes and board meetings significantly impede return on asset of multinational firm, but insignificantly influence the firm's growth rate. An increase in the number of committee meetings held during a year has negative insignificant impact on return on asset, as well as a positive effect on the firm's growth rate. Discoveries made in this study are in congruence with the discoveries of Azutoru, Obinne, & Chinelo (2017) which is a recent study conducted in the same country, with similar economic situations.

CONCLUSION AND POLICY RECOMMENDATIONS
Discoveries made in this study reflect that corporate governance has a negative significant impact on performance, measured in terms of return on asset, but its influence on the firm's growth rate is not significant in the Nigerian case. It was also established in the study that when corporate governance of multinational firms is viewed in terms of the number of directors engaged, as measured in terms of board size and their activism, as viewed in terms of the number of meetings (board and committee), it undoubtedly culminates into declined performance. It thus stands to reason that corporate governance should be viewed in a broader sense that can encapsulate the true governance in connection to opera-tional performance, so that considerations will be given more to issues that can provoke corporate optimality, other than on the composition, size, activism and/or independence of the directors and board committees of organizations. Hence, firms should ensure that what defines their corporate governance dynamics give credence to more than just the numbers of persons or meetings. As such, except on occasions when it is ultimately necessary, excessive increase in the size and number of meetings held by board or committee should be avoided, so as to ensure timely consensus on issues that can impede operational effectiveness and efficiency. More so, there is a need to design optimum committee framework that will engender significant growth without impeding the financial performance of the organization. All these recommendations are possible areas of further research to investigate how they can all be achieved by the firms investigated.