Corporate governance quality, corporate life cycle and investor confidence in commercial banks: Evidence from Nigeria

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A dominant strand of literature advances a positive association between corporate governance quality and investor confidence. However, the corporate life cycle may influence the relationship. Therefore, this study investigated the moderating role of the corporate life cycle in the association between corporate governance quality and investor confidence in the Nigerian banking industry. Corporate governance quality was proxied using a composite measure of board characteristics comprising board size, board meeting, independence, and board gender diversity, while investor confidence was proxied using the price-earnings ratio. Secondary data were obtained from the audited annual financial statements of 12 banks from 2006 to 2021. The study adopted a pooled regression model based on the results of Hausman, and the Breusch and Pagan Lagrangian multiplier test. The results showed that corporate governance quality positively and significantly impacted investor confidence at the introduction (coef = .318, p = 0.017) and decline (coef = 383, p = 0.011) phases of the life cycle. Banks at the introduction and decline phases of the life cycle were characterized by a narrow resource base, low profitability, and higher risky investments sufficient to attract investor confidence. The study concludes that corporate governance quality enhanced investor confidence at the introduction and decline phases of the banks’ life cycle.

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    • Table 1. Definitions of variables of the study
    • Table 2. Descriptive statistics
    • Table 3. Correlation matrix
    • Table 4. Diagnostic tests
    • Table 5. Regression results of the interaction effect of the corporate life cycle and corporate governance quality on investor confidence
    • Table 6. Pairwise comparisons of average marginal effects
    • Conceptualization
      Tajudeen John Ayoola
    • Data curation
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh
    • Formal Analysis
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh
    • Investigation
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Adebukola Olubunmi Ayoola
    • Methodology
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh, Christian Ehiobuche
    • Project administration
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh, Adebukola Olubunmi Ayoola, Christian Ehiobuche
    • Software
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh
    • Supervision
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Christian Ehiobuche
    • Validation
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Adebukola Olubunmi Ayoola, Christian Ehiobuche
    • Visualization
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Adebukola Olubunmi Ayoola
    • Writing – original draft
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh, Adebukola Olubunmi Ayoola
    • Writing – review & editing
      Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Adebukola Olubunmi Ayoola, Christian Ehiobuche