studies (Fatimoh, 2011; Olayinka, 2012;Olajide, 2013;Okoi, Stephen &Sani
2014.)have provided the link between corporate governance and firm performance.
However, despite the volume of the empirical work, there is no consensus on
corporate governance and firm performance.The problem areas that spurred the
interest in researching on this topic are specifically the despair of investors
on the capital market (Oyebode, 2009). Like
in the case of Cadbury Nigeria Plc, when it falsified its financial statement
by overstating its earnings and its shares were heavily sold on the Nigerian
Stock Exchange Market.
The agency problem
between managers and shareholdersresulted in the non-alignment between their
interests, and this allowed managers to generate personal benefits for their
own interest instead of those of the shareholders. Sanda, Mikailu&Garba
(2005), asserted that managers might take steps often to increase the size of
the firm and their pay, even though they may not necessarily raise the firm’s
profit, which is the major concern of the shareholder. Executive remunerationwas revealed to be
problematic in the case of well-known companies such as Eron, Wolrdcom, Royal
Bank of Scotland (Christina 2013).
Eichar (2009) noted
that one of the main factor that led to Eron’s collapse was its weak internal
control system where practices by management and insider trading occurred
solely for defrauding such companies in order to satisfy personal interest.Furthermore,
most studies in this area were either conducted in non-financial sectors while
few studies covered financial sector as a whole in Nigeria. Hence there exists
dearth in the scholarly work on the relationship between corporate governance
and firm performance. Therefore from the forgoing problems and gaps identified
above, the study will examine the link between corporate governance and firm
performance of some selected companies listed on the Nigeria stock exchange in
the financial sector.