Board Independence and Value of Cash Holdings of Listed Consumer Goods Manufacturing Firms in Nigeria

Abstract

Corporate governance codes around the world have consistently recommended that boards should be composed of greater number of non- executive directors to enhance board effectiveness. This study evaluated the effect of board independence on the value of cash holdings of consumer goods manufacturing listed on the Nigerian Exchange Group (NGX) from 2011 to 2023. The study retrieved data from the annual reports of 11 firms and Daily Official List of NGX. It measured board independence as the proportion on non-executive directors and cash holdings as cash plus marketable securities. The study was anchored on Agency Theory. It tested the formulated hypothesis using Feasible Generalized Least Square Regressions. Findings indicated that board independence significantly enhanced the value of cash holdings of listed consumer goods manufacturing listed on the NGX. The study recommended that firms should continue to ensure high board independence. It suggested further studies using more than one sector and complementing secondary data with primary data.

Keywords

• Board independence
• cash holdings
• consumer goods manufacturing firms

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