BOARD COMPOSITION AND FINANCIAL PERFORMANCE OF LISTED PHARMACEUTICAL FIRMS IN NIGERIA

Abstract

This study examines the influence of corporate board composition on financial performance of listed pharmaceutical firms in Nigeria. Using correlational research design and a panel regression technique of data analysis on a sample of 7 pharmaceutical firms for a period of 10 years (2009-2018), Using GLS multiple regression technique, the study found that female directors, institutional directors and non-executive directors have strong significant impact on the profitability of the sampled pharmaceutical firms in Nigeria during the period covered by the study. The study on the other hand found that board size has no significant impact on the profitability of sampled firms. Specifically, the study concludes that female directors and non-executive directors reduce their firms’ profitability, while institutional directors improve the profitability of the listed pharmaceutical firms in Nigeria. The study recommends that the managements and board of directors of the pharmaceutical firms in Nigeria should cut down their board size to maximum number of six since large size board do not necessarily increase to their firm performance. It was also recommended that the numbers of institutional director on the board of the listed pharmaceutical firms in Nigeria should be increased since their representation encourages increase in profitability. Finally, the study recommend that policy makers and other stakeholders should initiate a process of controlling the number of female directors on the board of listed pharmaceutical firms in Nigeria as their inclusion does not increase profitability.