BOARD OF DIRECTORS COMPENSATION AND FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
Abstract
ABSTRACT
This study examines the relationship between CEO compensation and firm value of deposit money banks listed on the Nigerian Exchange Group. Using panel data from eight Nigerian banks over a ten-year period (2014-2023), the research investigates how CEO remuneration affects share price, return on equity, and earnings per share. The study employs a reasoned sampling technique and relies on secondary data extracted from annual reports and financial statements. Analyses are conducted using descriptive statistics, normality tests, correlation analysis, and robust fixed effects regression models. The study reveals that CEO compensation has a positive and statistically significant relationship with all three measures of firm value: share price (coefficient = 14.24, p = 0.032), return on equity (coefficient = 0.082, p = 0.035), and earnings per share (coefficient = 3.43, p = 0.047). These results suggest that higher CEO compensation in Nigerian deposit money banks is associated with enhanced firm performance and shareholder value. The study recommended that deposit money banks should adopt performance linked compensation frameworks that tie CEO and board pay directly to share price, ROE, and EPS targets, establish independent remuneration committees to oversee, benchmark, and disclose executive pay policies transparently and should conduct annual reviews of compensation structures against industry benchmarks and long term strategic objectives to maintain alignment with shareholder value.
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