The Perception of Investment Analysts on the Corporate Governance of Nigerian Banks

Abstract

This study is the first (to the best of this researcher's knowledge) to provide a ranking on features of good corporate governance drivers and how these features influence investment decision making. The study was conducted in a developing country (Nigeria) context with the aim to espouse more relevant empirical and theoretical underpinnings (stakeholder-agency, signaling, and social cognition theories) different from the ubiquitous agency theory Anglo/Saxon corporate governance model. In developing countries, due to the weak institutions, all stakeholders are exposed, even those with contracts. Moreover, developing countries' businesses environment has a prevalence of strong dominant individual or family shareholders presence in firms. Therefore, this study focused on external constituents and differs significantly from the internal focus (on firm performance and organizational power and politics) of prior corporate governance research, and extends the understanding of the features of good corporate governance drivers. The research adopted a mixed method approach. The quantitative models were tested using data obtained from 141 investment analysts who make investment decisions in Nigeria. The quantitative models were assessed using an ordered logit regression analysis approach.
Further, the research employed the semi-structured interview technique to examine the psychological reasoning of investment analysts (27 interviews) when firms project good corporate governance drivers' features. The interviews were analyzed using a thematic analysis approach. The study provided conclusive evidences, and the findings were divided into three governance mechanisms; 1. Board structure and composition mechanism, 2. External Ownership Mechanism drivers, 3. Accountability mechanism drivers.