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The study examined the impact of corporate governance and financial performance of Nigerian Manufacturing industry using Unilever Nigeria Plc as case study. Board composition, board size, CEO’s duality status and number of shareholders were proxies for corporate governance and return on asset, return on equity and net profit margin were proxies for financial performance. The objectives of the study were to examine the impact of corporate governance variables on return on asset, return on equity and net profit margin. Secondary data related to the variables of interest were obtained from the annual financial statement of the sampled manufacturing firm between 2011 and 2016. The data obtained were subjected to the statistical techniques of descriptive statistics, Pearson correlation analysis and regression analysis. The results amongst others, indicated that corporate governance has significant impact on return on asset, return on equity and net profit margin. Furthermore, it was found that board size negatively impact on financial performance while board composition and number of shareholder positively impact on financial performance. The regression coefficient of CEO’s duality status was not obtained because the sampled manufacturing firm has different persons occupying the positions of CEO and board chairman within the period estimated. To this end, the study suggests amongst  others that companies should ensure that majority of their board members are independent, meaning that the directors are not employees of the companies and do not depend on it for their livelihood so that they can fearlessly and honestly monitor the activities of the CEO and other executive directors. This will also help to limit the possibility of the CEO and executive directors to exploit the company to their own advantage.







The growth and development of every economy depends on the country’s financial system. In Nigeria, the Manufacturing   industry practically commands the financial sector. The industry has undergone series of restructuring all geared towards protecting deposit funds, maintaining and ensuring soundness of Manufacturing   and improving the welfare of employees and stakeholders. The Manufacturing   sector has been bedeviled with internal (workers and investors) and external (public and depositors) dissatisfaction culminating to image problem. As a result, most Manufacturing firm  have sort for improved techniques like information and communication technology (ICT), total quality management strategies, corporate governance strategies, repackaging and rebranding, to compete more effectively to solve these problems and as well to enhance their financial and corporate performance (Akintoye, 2010; Adekunle, 2013).

Corporate governance has been an issue of global concern long before now. However, it came to limelight in the 1980s as a result of the fallout of the Cadbury report in the United Kingdom, which concentrated on the financial aspects of corporate governance. Immediately followed suits, the issue of corporate governance transmitted across all developed and developing countries (Akpan & Rima, 2012). Proper governance of companies is now as crucial to the world economy as the proper governance of countries and will converge in associated issues of competitiveness, corporate citizenship, social and environmental responsibility. The governance of Manufacturing firm  becomes even more prominent considering their role in financial intermediation in developing economies. Commercial Manufacturing firm  are the main providers of funds to enterprise and where there is thin or absence of good capital market, their failure becomes the failure of system. Simpson (2009) notes that the impact of the failure of the Manufacturing   system can have immense cost, as it has been repeatedly been seen that manufacturing firm failure cost developing countries up to 15% of their GDP and losses that outweighs aids received.  The major challenge of world’s economy today is not in the area of manufacturing modern equipments that will help fight government rebellions or any such crises that may occur in the economy. However, solving the problem of governance can help to totally strengthen an economy and improve the living standards of its citizenry. This is evident in the fact that many companies all over the world suffer from the impact of bad governance and which in effects results to costly impact on the performance of organizations in the economy (Bebeji, etal, 2015).

Commercial Manufacturing firm  play crucial roles in propelling the entire economy of any nation by channeling surplus funds to the deficit units, of which there is dire need for repositioning to achieve efficient financial performance through a reform process geared towards forestalling manufacturing firm collapse. In Nigeria, the reform process of the Manufacturing   sector is part and parcel of government strategic agenda aimed at restructuring and integrating the Nigerian Manufacturing   sector into continental and global financial system. To make the Manufacturing   sector sound according to Akpan and Rima (2012), the sector has undergone remarkable changes over the years in terms of number of institutions, structure of ownership, as well as breadth and depth of operations. These changes have been influenced mostly by the constraints posed by deregulation of the financial system, globalization of operations, technology advancement and implementation of supervisory and prudential requirements that conform to international regulations and standards, which corporate governance is inclusive.

Corporate governance is generally the systems of rules, practices and processes by which a company is directed and controlled. According to Akintoye (2010) corporate governance involves the balancing the interest of a company’s many stakeholders such as shareholders, management, customers, suppliers, financier, government and the community. Corporate governance also provides the platform for attaining company’s objectives and it covers practically every sphere of management from actions plans and internal controls to performance measurement and corporate disclosure.  Good corporate governance wields more profits for the firms, raises their valuation and sales growth and it has the possibility of reducing their capital expenditure. It has been reported by Love (2006) that good corporate governance increases the confidence of stakeholders and stimulates the goodwill of the organization. Corporate governance is a tool to ensure the existence of equity, fairness, accountability and transparency in corporate reporting. Mayer (2011) notes that corporate governance is not only about improving corporate efficiency, it also encompasses two major issues namely the company’s strategy and life cycle development.  It therefore, ensures that management of organizations pursues those strategies that will safeguard the interest of the shareholders. Good corporate governance is generally identified as those governance mechanisms that are based on a higher level of corporate responsibility that an organization exude in relation to transparency, accountability and ethical issues (Bebeji, etal, 2015). Corporate governance is usually targeted to enhance competition, while allowing customers the option of making a choice. However, corporate governance arrangement and institutions vary from place to place but the focus is to promote corporate unbiasedness, accountability and probity (Akpan & Rima, 2012). Thus, good corporate governance represents a central issue for the operation of modern Manufacturing   industry in the world today as it has the capacity of affecting their profitability, solvency and liquidity levels.



Aremu (2014) observed that corporate governance is still at infancy in the Nigerian Manufacturing industry as only 40% of quoted commercial Manufacturing firm  seem to have recognized corporate governance codes. The weakness inherent in the application of corporate governance ethics is perhaps the most vital factor responsible for corporate failures and financial distress among Manufacturing firm . The recent overtime is high profile of corporate fraud which tends to lead to failures in the Nigerian Manufacturing   industry. Poor application of corporate governance mechanism is identified as one of the major possible factor in virtually all known instance of Manufacturing firm ’ failure in the country due to their non-compliance to corporate government ethics. Aremu (2014) lamented that the past distresses experienced by Manufacturing firmis as a result of lack of proper oversight, regulatory, supervisory and corporate governance functions by the board of directors, in which some them run their organizations for their own personal interest.




The main objective of the study is to examine the impact of corporate governance on financial performance of the Manufacturing firmusing a case study of Unilever Nigeria.  The specific objectives of the study are:

1)      To examine the impact of corporate governance on returns on   asset of Unilever Nigeria Plc.

2)      To examine the impact of corporate governance on returns on   equity of Unilever Nigeria Plc.

3)      To examine the impact of corporate governance on net profit    margin of the Unilever Nigeria Plc.



The study is aimed to provide relevant answers to the following research questions and they are:

1)      Does corporate governance impact on returns on asset of First Manufacturing firm Plc?

2)      Does corporate governance impact on returns on equity of First          Manufacturing firm Plc?

3)      Does corporate governance impact on net profit margin of First Manufacturing firm Plc?



Based on the objectives and questions raised in the study, three hypotheses were developed to guide the study. The three hypotheses are stated in their null form and they include:

H01:  Corporate governance has no significant impact on returns on   asset of Unilever Nigeria Plc.

H02: Corporate governance has no significant impact on returns on    equity of Unilever Nigeria Plc.

H03:  Corporate governance has no significant impact on net profit     margin of Unilever Nigeria Plc.



The study provides a picture of where Manufacturing firm  stand in relation to the codes and principles on corporate governance introduced by the Central Manufacturing firm of Nigeria. It will further provides an insight into understanding  the degree to which the Manufacturing firm  that are reporting on corporate governance have been compliant with different section of the codes of the best practice and where they are experiencing difficulties.

Financial institutions, non-financial institutions, private sectors, stakeholders in financial system and as well as other corporate titans will find this study as an invaluable asset which spelt out ways of improving an organization’s financial performance via corporate governance

The research study will also be beneficial to future researchers and undergraduate and postgraduate students wishing to carry out similar study in their future research undertakings.



The study is delineated to examine the impact of corporate governance on financial performance by placing strong emphasis on Unilever Nigeria Plc between the periods 2011-2016.




Secondary data sourced from the Nigerian Stock Exchange (NSE) and financial statements of Unilever Nigeria Plc for the period considered were used in the study. Returns on asset (ROA), returns on equity (ROE) and net profit margin (NPM) were used as indices to measure financial performance while board size (BS), board composition (BC), chief executive officer’s duality status (CDS) and number of shareholders (NS) were used as indices to measure corporate governance.

Three models are developed to estimate the impact of corporate governance on financial performance of the sampled manufacturing firm. The first model estimates the impact of corporate governance (BS, BC, CDS, NS) on returns on asset (ROA). The second model estimates the impact of corporate governance (BS, BC, CDS, NS) on returns on equity (ROE). The third model estimates the impact of corporate governance corporate governance (BS, BC, CDS, NS) on net profit margin (NPM).

The regression analysis is therefore employed to estimate the coefficients of parameters estimate in each of the models.


CORPORATE GOVERNANCE: These refer to the set of rules, controls, policies and resolutions put in place to dictate corporate behavior to the stakeholders of a firm.

FINANCIAL PERFORMANCE: This is a measure of how well a firm can use assets from its primary mode of business and generates revenue. This term is also used as a general measure of firm’s over all financial health over a given period of time.

RETURNS ON ASSET: This measure of a company’s profitability equals to a fiscal year’s earnings divided by its total asset, expressed as a percentage.

RETURNS ON EQUITY:  This measure of how well a company used re-invested earning to generate additional earnings, equal to fiscal year after-tax income (after preferred stock dividends but before common stock dividends) divided by book value expressed as a percentage.

TOTAL ASSETS: This refers to the final amount of all gross investments, cash and equivalents, receivables and other assets presented on a firm’s balance sheet. Total assets are the aggregation of fixed assets and current assets.

NET PROFIT MARGIN: This refers to how much of a company’s revenue are kept as net income. The net profit margin is generally expressed as a percentage.


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