CORPORATE GOVERNANCE AND FIRMS' SURVIVAL IN NIGERIA: COX PROPORTIONAL HAZARD MODEL APPROACH

Abstract

Managerial decisions play key roles in the performance, profitability, continuity and survival of business enterprise. Meanwhile, the quality of decision is a function of management composition. Corporate governance attributes varies in influencing firm survival. Thus, this study evaluates the influence of corporate governance metrics on firms' survival using survival analysis technique (Cox proportional model). Longitudinal design was adopted for the study. A corporate governance index such as board size, board composition, ownership concentration and company specific was used as control variable. Information extracted from annual reports complemented by data from Nigerian stock exchange (NSE) factbooks of sampled firm was used between years 2000 to 2018. Descriptive statistics, Kruskal-Wallis Test and Cox proportional hazard regression was used to analysis the data. The findings revealed that board independence, non-executive chairman, ownership concentration and company size hazard ratios of 2.5012, 3.0001, 1.0330 and 2.0071 respectively have a corresponding risk failure of 50.12 percent, 30.0 percent, 3.30 percent and 0.7 percent for BIND, NEXC, ONC and FSIZE respectively. Age has no significance in explaining corporate survival. The study concluded that there is significant relationship between corporate governance attributes with company specific variables on corporate survival in oil and gas firms in Nigeria. It was recommended that ownership concentration and company size should be control by the management as they contribute significantly to corporate failure.