BOARD INDEPENDENCE AND THE FIRM FINANCIAL PERFORMANCE

ABSTRACT

This study examines board Independence and the firm financial performance. It specifically focused on ascertaining the behaviours of tenure of CEO; outside directors, audit committee and family affiliation on the firm performance, as the dependent variable. Secondary data on the four (4) selected independent variables were collected for sixty-three (10) companies for the periods of 2009 to 2018. The data was analysed using descriptive statistics, correlation matrix and panel regression technique. The result showed that tenure of CEO has no significant effect on firm financial performance, audit committee has no significant impact on firm financial performance, family affiliation has significant impact on firm financial performance, and lastly, outside directors has significant effect on firm financial performance. The study recommends, among others, that audit committee has a negative relationship with firm performance, management should ensure that the activities of the audit committees are checkmated by firm so that the number of members does not negative influence their operations. Tenure of CEO has a negative relationship with firm performance, management should endeavour to strike a balance as to the number of years and the number of times a CEO can occupy the office so that it will not affect the performance of the firm. Family Affiliation has a positive relationship with firm performance, hence, management of firms should ensure that that reason for the formation of interlocks which is co-optation and monitoring of the market must by strictly observed for better firm performance.