Impacts of Corporate Governance Practices on the Liquidity and Capital Adequacy of Insurance Companies in Nigeria

Fadun Olajide Solomon, Saka Toyin Shafau

University of Lagos, Lagos State University of Science and Technology

Keywords: Corporate governance, Liquidity, Capital adequacy, Insurance, Insurance Companies, Nigeria.

Abstract

Corporate governance practices impact insurance companies' liquidity and capital adequacy. This study explored the impact of corporate governance practices on insurance companies' liquidity and capital adequacy. This study used an ex-post facto research design, using a 20-year (2004 – 2023) time series, data extracted from the financial records of selected insurance companies in Nigeria. The Granger Causality Test and Panel Least Squares Regression were used to test the study's hypotheses. The Hausman test was used to determine if the Fixed Effect Model or the Random Effect Model was adopted for the panel regression. This study revealed that board Size (BSZ) has a positive significant impact on liquidity and capital adequacy; board Independence (BIN) does not have a positive significant impact on liquidity and capital adequacy; board Compensation (BCOM) has a positive significant impact on liquidity and capital adequacy; and controlling interest ratio has a positive significant impact on the liquidity and capital adequacy of insurance companies in Nigeria. This implies that insurance company's financial success must be considered when determining its directors' compensation. The study recommended that insurance firms have a board of directors with a sufficient number of people with varying levels of experience and competence. This will help the board of insurance companies' decisions on liquidity and capital adequacy management.

Published

March, 2025

ISSUE

VOL.5.NO.1

Citation

Fadun Olajide Solomon, Saka Toyin Shafau (March, 2025). Impacts of Corporate Governance Practices on the Liquidity and Capital Adequacy of Insurance Companies in Nigeria. International Journal of Marketing and Management Sciences,(VOL.5.NO.1), 269 - 285.

APA format

Fadun Olajide Solomon, Saka Toyin Shafau. "Impacts of Corporate Governance Practices on the Liquidity and Capital Adequacy of Insurance Companies in Nigeria." International Journal of Marketing and Management Sciences, vol. , no. VOL.5.NO.1, March, 2025, pp. 269 - 285.

MLA format

Fadun Olajide Solomon, Saka Toyin Shafau. March, 2025. "Impacts of Corporate Governance Practices on the Liquidity and Capital Adequacy of Insurance Companies in Nigeria." International Journal of Marketing and Management Sciences , no. VOL.5.NO.1: 269 - 285.

Chicago format

Fadun Olajide Solomon, Saka Toyin Shafau (March, 2025). "Impacts of Corporate Governance Practices on the Liquidity and Capital Adequacy of Insurance Companies in Nigeria." International Journal of Marketing and Management Sciences, vol. , no. VOL.5.NO.1, pp. 269 - 285.

Harvard format