The Role of Corporate Governance in Financial Performance: A Study of Dangote Cement
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Background of the Study
Corporate governance refers to the systems, principles, and processes by which companies are directed and controlled. Good corporate governance is often linked to improved financial performance, as it ensures that companies are managed efficiently and ethically, which in turn builds investor confidence and enhances operational efficiency (Ibrahim & Ismail, 2024).
Dangote Cement, one of the largest companies in Nigeria, has seen remarkable growth, largely due to strong corporate governance practices. As a publicly traded company, Dangote Cement is subject to both internal and external governance mechanisms aimed at ensuring transparency, accountability, and fair treatment of all stakeholders (Ogunjimi & Adeyemi, 2025). However, despite these efforts, there are ongoing challenges regarding the alignment of governance practices with the company’s financial performance.
Statement of the Problem
Corporate governance is often seen as a key factor influencing the financial performance of businesses. However, there is limited empirical evidence regarding how corporate governance affects financial performance in Nigerian companies, especially in the cement industry. Although Dangote Cement is known for its robust governance framework, it faces challenges such as regulatory pressures, market competition, and economic instability that may hinder the full realization of corporate governance benefits.
Objectives of the Study
- To assess the relationship between corporate governance practices and the financial performance of Dangote Cement.
- To analyze the impact of governance structures on profitability and investor confidence.
- To identify the challenges that affect the implementation of effective corporate governance in Dangote Cement.
Research Questions
- How do corporate governance practices affect the financial performance of Dangote Cement?
- What is the relationship between governance structures and profitability in Dangote Cement?
- What challenges hinder the implementation of effective corporate governance in Dangote Cement?
Research Hypotheses
- There is a significant positive relationship between corporate governance practices and financial performance in Dangote Cement.
- Strong corporate governance structures enhance profitability and investor confidence.
- Challenges such as regulatory pressures and market competition negatively impact the effectiveness of corporate governance in Dangote Cement.
Scope and Limitations of the Study
The study focuses on Dangote Cement’s corporate governance practices and their influence on financial performance from 2023 to 2025. Limitations include access to internal financial records and potential bias in evaluating corporate governance practices.
Definitions of Terms
- Corporate Governance: The system by which companies are directed and controlled, involving the relationships among shareholders, directors, and other stakeholders.
- Financial Performance: A measure of a company's profitability, revenue growth, and overall financial health.
- Profitability: The ability of a company to generate profit relative to its revenue, assets, or equity.
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