Household savings

relationship with firm performance measured by labour productivity rather a quadratic relationship. The result of this study is supported by (Olowookere, 2008). Also, Block Holding (BH) is positively statistically significant at 1% level of significance with labour productivity. It reveals that an increase in Block Holding will lead to an improvement in performance measured by labour productivity. The result this study is affirmed by (Olowookere, (2008) while Xu et al observed an inverse relation between BH and labour productivity. However, leverage (L) is negatively statistically significant at 10% level of significance. It shows that an increase in the level of leverage will result into decrease in the firm performance gauged by labour productivity. The finding of this study negates the study of Olowookere, (2008) who found a positive significant relationship between leverage and labour productivity. Lastly Firm size (FS) as a measure of corporate governance indicator is positively significant at 1% with labour productivity. This reflects that as the firm size increases the performance level measured by labour productivity will continue to rise. This is contrary to Olowookere, (2008) who found an inverse relationship between firm size and labour productivity.

4.3 Hypotheses Testing

Table 4.3 presents the effects of corporate governance indicators on return on assets using all firms. For the overall corporate governance indicators explain only 8.4%

of changes in Return on Assets, as shown by the coefficient of determinant R² of 0.084 which means that corporate governance variables (BS, OBD, DSH, BH, IAC, L and FS) jointly explained 8.4% of the variability of return on assets of Nigerian listed firms while the remaining 91.6% variance is not explained by the independent variables. This might be explained by other factors outside the model, like extraneous variables that is captured by the error term ().

F-statistics of 5.21 shows that generally the selected independent variables are statistically significant at 1% level in generating return on assets of Nigerian listed firms.

In addition, our prior expectation as concerns the effect of board size on performance is met as board size positively affect return on asset to certain level after which the increase in the latter achieve a corresponding decline in the former. This shows that at lower board size, a marginal increase in the number of members will initially raise ROA as the board‟s capacity for monitoring is enhanced (Amer, 2014; Nidhi et al 2016)). However, at some higher board size, increasing the board further may distort its operations (Olowookere, 2008). On the other hand L and FS are negatively correlated with ROA.

That is, the more any of these two independent variables are increased the less ROA will accrue to the listed Nigerian firms. With p value of 0.01 for leverage, 0.01 for firm size and 0.05 for square of board size which is within 5% level of significance the null hypothesis (H0) should be rejected, hence leverage, firm size and square of board size as

measure of corporate governance mechanisms are statistically significant to the performance of listed Nigerian firms measured by return on assets.

Test of Hypothesis-2:

H0: Corporate governance mechanisms have no effect on Return on Equity of Nigerian listed firms

H1: Corporate governance mechanisms have effect on Return on Equity of Nigerian listed firms

Table 4.4 presents the effects of corporate governance measures on Return on Equity of listed Nigerian firms. The coefficient of determinant R² for all firm samples is 0.063 or 6.3% which shows that the selected corporate governance indicators jointly explained only 6.3% of the variability of return on equity of the Nigerian listed firms‟

performance while the remaining 93.7% variance is not explained by the independent variables but by exogenous variables. This might be explained by other factors outside the model, like extraneous variables that is captured by the error term (). It implies that it is not a good fit. It is observed that raising the board size initially reduces return on equity, but raising it further beyond a level has the tendency of raising the return on equity. This is contrary to expectation as observed in return on assets. Also enlargement of Block holding dampens Return on Equity. Furthermore, as firms become more geared, they record higher returns on equity this is because higher level of debt makes the creditor interested in the affairs of the firms, which enhances performance. It implies that it is not a good fit. For all firms only board size and square of board size with p- value of

0.05 depicts that the two variables are statistically significant at 5% the null hypothesis (H₀) should be rejected for two variables while the alternative (H₁) be accepted for outside board directors, directors shareholding, independent of audit committee, block holding, leverage and firm size for return on equity as a measure of performance.

Test of Hypothesis-3:

H₀: Corporate governance mechanisms have no effect on Price Earnings Ratio of Nigerian listed firms

H₁: Corporate governance mechanisms have effect on Price Earnings Ratio of Nigerian listed firms

The effect of Corporate Governance on Price-Earnings Ratio is presented in table 4.5. The coefficient of determinant R² is 0.054 or 5.4% for the overall sample implying that the selected corporate governance mechanisms jointly and severally explained 5.4%

of the variability of price earnings ratio of Nigerian listed firms while the remaining 94.6% variance is not explained by the independent variables. This might be explained by other factors outside the model, like extraneous variables that is captured by the error term (). This is not of a good fit.

Contrary to expectation, board size does not have significant relationship with performance gauged by price earnings ratio. Outside board directors‟ still shows a negative relationship with PE ratio while larger firm earns more value per share. The implications of these effects are as discussed earlier. With p value of 0.05 for outside board directors and 0.01 for firm size, the null (H0) should be rejected for the two

variables in case of all firms while alternative (H1) should be accepted for board size, directors shareholding, independent audit committee, block holding, leverage as they do not have significant correlation with price earnings ratio.

Test of Hypothesis-4:

H₀: Corporate governance mechanisms have no effect on Tobin’s Q of Nigerian listed firms

H1: Corporate governance mechanisms have effect on Tobin’s Q of Nigerian listed firms

The effect of Corporate Governance on Tobin‟s q is presented in Table 4.6. The coefficient of determinant R² of 0.090 or 9% for the entire sample shows that the selected corporate governance mechanisms jointly explained 9% of the variability of Tobin‟s q of Nigerian listed firms while the remaining 91% variance is not explained by the independent variables. This might be explained by other factors outside the model like extraneous variables that is captured by the error term ().

Board size positively influence TQ (firm value) to a level after which the increase in the latter achieve a corresponding decline in the former. It reveals that the relationship is not linear but quadratic. However, number of outsiders board directors negatively influence TQ. Board size exerts positive effect on TQ over a range of values after which the reverse occurs. Therefore, higher board size may distort the flow of quality communication and thereby reducing firm performance. Increasing the proportion of outside board directors is theoretically expected to aid firm performance, as independent

directors are expected to support value-maximising goals of the firm However contrary to expectation in this model, increase in outside board directors reduces performance proxied by Tobin‟s q. With the p value board size, outside board directors and square of board size are statistically significant at 0.05 for the three variables hence the null hypothesis (H0) should be rejected for board size, outside board directors and square of board size using tobin‟s q as measure of firm performance. On the other hands, alternative hypothesis (H₁) should be accepted for directors‟ shareholding, independent of audit committee block holding, leverage and firm size.

Test of Hypothesis-5:

H₀: Corporate governance mechanisms have no effect on Labour Productivity of Nigerian listed firms

H1: Corporate governance mechanisms have effect on Labour Productivity of Nigerian listed firms

The effect of Corporate Governance on labour productivity of Nigerian listed firms is presented in Table 4.7. The coefficient of determinant R² for the all firms sample is 0.619 or 62% which shows that the selected corporate governance mechanisms jointly and severally explained about 62% of the changes in labour productivity of the Nigerian listed firms. While only about 38% variance is not explained by the independent variables. R² for financial firms is 61.9% 0r 62% while 38% might be explained by other factors outside the models like extraneous variables that is captured by the error term ().

The models for selected firms indicate that it is of a good fit.

Board size still exerts an inverted U shape effect on firms‟ labour productivity.

Similarly, block holding and firm size enhances higher labour productivity. However, leverage reduces the level of productivity. This may be due to financial friction by firms that is, the difference between the return businesses earn from capital plant and equipment and the market cost of capital. Board size, block holding, firm size and square of board size with p value of 0.01 the four variable are statistically significant thus; null hypothesis (H₀) for each of these variables should be rejected. Meanwhile alternative hypotheses (H1) should be accepted for outside board directors, directors‟ shareholding, independent audit committee and leverage measured by using labour productivity.as measure of performance for the listed Nigerian firms.