Abstract
This study investigated the effect of corporate monitoring mechanisms on the financial
performance of listed commercial banks in Nigeria. The study sought to determine how board
size, board independence, audit committee composition, and ownership concentration affect
financial performance, measured using earnings per share (EPS). Secondary data were
sourced from the audited annual reports of selected commercial banks listed on the Nigerian
Exchange Group (NGX) for the period 2015–2024. Panel data estimation techniques were
employed, with random-effects regression chosen based on Hausman and Breusch-Pagan
specification tests. Descriptive statistics revealed wide variations in governance structures
across the sampled banks, particularly in board size and ownership concentration.
Diagnostic tests confirmed the absence of multicollinearity, though heteroskedasticity was
present and corrected using robust standard errors. The random-effects results showed that
board size had a negative and significant effect on financial performance, suggesting that
excessively large boards negatively impact shareholder returns. Board independence and
audit committee composition were statistically insignificant. In contrast, ownership
concentration had a positive and significant effect on EPS, reflecting the monitoring role of
large shareholders. The study concludes that effective governance requires balancing
concentrated ownership with strong institutional oversight to avoid minority shareholder
exploitation. The study recommends that Regulators should promote transparency in the
dealings of blockholders while encouraging institutional investors to take larger, engaged
stakes. This balance would harness the monitoring benefits of concentrated ownership while
ensuring fairness, ultimately driving sustained improvements in financial performance.