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
E-mail: walemose@gmail.com, alisukan@yahoo.co.uk and mohdliman2@yahoo.com

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 Nigerian Stock of 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 proxed 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

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