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ABORODE ADEREMI OLUGBEMIGA PhD Researcher

IMPACT OF BOARD OF DIRECTORS STRUCTURE ON SHAREHOLDERS VALUE OF NIGERIAN BANKS

Board of Director is one of the internal mechanisms of corporate governance (Gillian, 2006; Rezaee, 2007; Daoud, 2011; Arosa, 2012; Zied et al, 2013; Nesrine and Younes, 2013), which are put in place as antidotes to agency problem that emanates as a result of separation of management and ownership (Berle and Means, 1932; Daoud, 2011; Nesrine and Younes, 2013). These governance mechanisms are intended to ensure agent-principal interest alignment, protect shareholder interests and thus reduce agency costs with its attendant impact on the shareholders value (Davis et al., 1997; Hermalin & Weisbach, 2003; Nesrine and Younes, 2013). The structure of the board of directors, as the firms final decision-making control, is fundamental to its capability to monitor and control the discretions of top-level managers (Fama & Jensen, 1983), and therefore considered significant and imperative to critically study the oversight responsibilities of the board of directors vis--vis their effects on the firms shareholders value. Over the years, there have been mixed opinions by researchers on whether board of directors structure (as a corporate governance mechanism) has positive, negative or no impact on the shareholders value of a firm (Zied et al, 2013). Kumar and Singh (2012) and Majid et al (2012) find positive impact between shareholders value and the metrics for shareholders value used (board size, board independence and CEO duality respectively). On the other hand, Mian et al (2012) find a negative relationship between the Board size and firms value. Hardjo and Alizera (2012) also find that independent board has negative relationship with the shareholders value while Mahmood and Abbas (2011) find that CEO duality is negatively related to firms value. There are some (Medhat and Rehab, 2012 and Adnan et al, 2011) who find no relationship between the board of Directors structure and the value of the firm. The aim of this thesis is to investigate the impact of board of directors structure on the shareholders value of the Commercial Banks in Nigeria. Two metrics will be used for determining the level of directors structure: board size and board independence. Although CEO duality is commonly used by researchers (Quiser et al , 2011 ; Kumar and Singh, 2012 ; Majid et al, 2012) as a proxy for directors structure, review of commercial banks in Nigeria shows that the position of Managing Director is separated from Board Chairman. Economic Value Added (EVA) and Market Value Added (MVA) will be used in conjunction with Return on Equity (ROE) and Return on Assets (ROA) as measures of performance. Data collection and Analysis: This study makes use of secondary data from published financial statements of the banks, textbooks; magazines; journals; newspapers; articles, internet materials and other related materials from Central Bank of Nigeria as well as the Nigerian Stock Exchange. Regression analysis (through the help of SPSS 15.0 window and Excel) will be adopted to obtain relationship between the board of directors structure and the shareholders value; Paired t-test will also be used to test the degree of significance of difference in the average between variables under consideration.

Email address: remi@accamail.com; a.olugbemiga5772@student.leedsmet.ac.uk

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