Prepotency of Nigerian Securities and Exchange Commission Code of Corporate Governance among Public Companies

Abstract

This study empirically examined the prepotency (i.e. superiority at the level of importance) of the regulatory provisions of the Securities and Exchange Commission’s (SEC) Code of Corporate Governance (CCG) for public companies in Nigeria. A stratified random sampling technique was adopted in arriving at a sample size of forty publicly quoted companies in the Nigerian Stock Exchange (NSE). The regulatory provisions of SEC’s CCG that were examined in this study as independent variables include Ownership Concentration, Separation of the Position of Chairman from Chief Executive Officer, Board size and Independent Directors. The proxies for companies’ performance are Profit Margin, Earnings Per Share, Return on Equity, Return on Asset and Tobins Q. Related literatures were reviewed and the Pearson, Kendall and Spearman rho Matrices respectively were employed for the purpose of analysis and estimates. Findings from the comparison of the correlation co-efficients of Pearson’s, Kendall Tau-b’s and Spearman’s rho Matrices rank the SEC code in order of importance as follows: 1st, Ownership Concentration;  2nd, Board size, 3rd Separation of the Position of Chairman from Chief Executive Officer and 4th, Independent Directors. Recommendations include upscaling the SEC Code of Corporate Governance provisions on Board size and separation of the position of Chairman from Chief Executive Officer together with that of Independent Directors to the same level of importance with ownership concentration, for the purpose of risk reduction and foreign capital inflow at the company-level and capital market rebound including the nation’s currency appreciation over the prevailing recession in Nigeria.