Board Independence, Financial Performance, and Share Price Dynamics: Evidence from Nigerian Consumer Goods Firms

Abstract

Purpose
This study examines the determinants of share prices among Nigerian consumer goods firms, focusing on firm-specific characteristics, capital structure, and the moderating effect of board independence.

Methodology
Panel data from 13 firms covering 2014 to 2023 are analyzed using fixed effects and generalized method of moments (GMM) estimators to assess both direct and conditional effects on market valuation.

Findings
The results indicate that firm size and market-wide performance consistently drive share price, underscoring the significance of resource advantages and macro-financial sensitivity in emerging markets. In contrast, profitability, liquidity, and leverage exhibit weaker direct effects. Board independence significantly moderates the relationships between firm size and profitability on the one hand, and share price on the other, enhancing the benefits of scale and constraining the influence of profitability on valuation. These findings highlight the conditional effectiveness of governance mechanisms and the dominant role of market-wide factors in determining valuation outcomes.

Conclusion
The study provides implications for corporate strategy, regulatory policy, and investor decision-making in emerging economies, emphasizing the need to align firm-level policies with macroeconomic conditions.