CORPORATE GOVERNANCE MECHANISMS AND FINANCIAL DISTRESS LIKELIHOOD OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

This study examined corporate governance mechanisms and financial distress likelihood of listed consumer goods companies in Nigeria. The objectives of this study were: to examine the relationship between corporate governance mechanisms and the likelihood of financial distress in listed consumer goods companies in Nigeria, to determine the influence of firm profitability on the likelihood of financial distress in listed consumer goods companies in Nigeria and to investigate the relationship between managerial ownership structure and the likelihood of financial distress among listed consumer goods companies in Nigeria. The independent variables were board independence (BIND), profitability (ROA), and managerial ownership (MO); while the dependent variable was financial distress likelihood (FDL) proxied by Altman Z_score. A secondary data source gathered from the Nigerian Exchange Group (NGX) website was used for this study and the data were analyzed using descriptive statistics, correlation analysis, model fit and logit regression model for hypotheses testing. The findings show that: a, Board independence (BIND) was negatively associated with financial distress, suggesting that more independent boards may reduce distress risk, but the effect was not statistically significant; b, profitability (ROA) was strongly negative in sign, indicating that higher profitability decreases the likelihood of distress, although this result was not statistically significant, likely due to data variability and c, managerial ownership (MO) exhibited a positive but non-significant relationship with distress. And the study recommends that: since board independence showed a negative but statistically insignificant relationship with financial distress, it is recommended that listed consumer goods firms should strengthen the functional effectiveness of independent directors; management should therefore adopt strategies that stabilize and sustain profitability such as operational efficiency, product diversification, and innovation as profitability remains a crucial financial safeguard and lastly, ownership reforms should be considered to encourage managers to hold more substantial stakes in their firms, either through equity participation schemes, performance-based share allocations, or stock options.