The Impact of Corporate Governance on Investor Confidence: A Study of Nigerian Stock Exchange Companies
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Background of the Study
Corporate governance is critical in shaping investor confidence, particularly in emerging economies like Nigeria. It encompasses the systems, principles, and processes through which companies are directed and controlled. Effective corporate governance promotes transparency, accountability, and ethical business practices, which are essential for attracting and retaining investors (Adebayo & Johnson, 2023).
The Nigerian Stock Exchange (NSE) hosts numerous publicly traded companies, many of which struggle with governance challenges, including weak oversight, poor financial disclosures, and conflicts of interest. Such issues erode investor trust and limit the flow of capital into the economy (Oluwatobi et al., 2024). This study examines the influence of corporate governance on investor confidence, providing insights into best practices for fostering trust in Nigeria’s financial markets.
Statement of the Problem
The Nigerian Stock Exchange has faced declining investor confidence due to governance lapses in several listed companies. Issues such as financial mismanagement, inadequate disclosures, and weak board oversight undermine trust and discourage both local and foreign investment (Nwachukwu, 2023).
Without robust corporate governance practices, investor confidence will continue to dwindle, limiting the potential for economic growth and capital market development. Addressing this issue is crucial to strengthening Nigeria’s financial ecosystem.
Objectives of the Study
- To evaluate the impact of corporate governance on investor confidence in Nigerian Stock Exchange companies.
- To identify governance challenges affecting investor trust in NSE-listed companies.
- To recommend strategies for improving corporate governance to boost investor confidence.
Research Questions
- How does corporate governance impact investor confidence in Nigerian Stock Exchange companies?
- What governance challenges affect investor trust in NSE-listed companies?
- What strategies can improve corporate governance to enhance investor confidence?
Research Hypotheses
- Corporate governance significantly influences investor confidence in Nigerian Stock Exchange companies.
- Governance challenges negatively affect investor trust in NSE-listed companies.
- Improved governance practices can enhance investor confidence in the NSE.
Scope and Limitations of the Study
The study examines corporate governance practices and their impact on investor confidence in NSE-listed companies between 2023 and 2025. Limitations include restricted access to corporate governance reports and the potential for biased responses from investors.
Definitions of Terms
- Corporate Governance: The systems and processes through which companies are directed and controlled.
- Investor Confidence: The trust and willingness of investors to commit capital to a company or market.
- Transparency: The extent to which companies openly share accurate and timely information with stakeholders.
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