Ownership Structure and Financial Performance of Listed Consumer Goods Companies in Nigeria: The Mediating Effect of Agency Costs
Moses Babatunde OLANISEBE, Aliyu Suleiman KANTUDU and Muhammad Liman MUHAMMAD
The study examines the mediating effect of agency costs on the relationship between ownership structure and financial performance of listed consumer goods companies in Nigeria. The target population was twenty (20) listed consumer goods companies on the Nigerian Stock Exchange, however, only nineteen (19) had consistency of data for a balanced panel regression for the period of eleven years (2010-2020). The study makes use of secondary data generated from reports and accounts of the sampled companies. The data was analyzed by means of descriptive statistics, correlation and Multiple Regressions of Hierarchical analysis using STATA (Version 14). The ownership structure was measured using managerial, institutional, ownership concentration and institutional ownerships while agency cost was measured using assets turnover ratio. In addition, financial performance was probed by ROA. The results of hierarchical multiple regression analysis revealed that the agency cost has no significant mediating effect on relationship between managerial ownership and financial performance. However, the study confirmed that there is a significant partial mediating effect of agency cost on the relationship between (ownership concentration and institutional ownership) and listed financial performance of the sampled companies. Based on the findings, the study recommends among others, that ownership concentration as well as institutional ownership of consumer goods companies in Nigeria should create an effective monitoring strategy to control the managerial opportunistic behavior to lower agency conflicts, and hence lower agency costs and this will lead to increase in financial performance. Lastly, the paper calls for further research in the area.
Keywords: Ownership structure, agency costs, ROA, consumer goods companies, Nigeria