Institutional Quality and Corporate Governance Effectiveness of Nigerian Listed Firms

This study investigates the nexus between institutional quality and corporate governance effectiveness among listed firms on the Nigerian Exchange Group (NGX) for the period 2011–2025, drawing on a balanced panel dataset of 148 listed firms. Grounded in agency theory, institutional theory, and the resource dependence perspective, the study employs a robust panel regression framework — incorporating fixed effects, random effects, and the system Generalised Method of Moments (GMM) — to address endogeneity concerns and firm-specific heterogeneity. Institutional quality is operationalised through six dimensions: rule of law, control of corruption, regulatory quality, government effectiveness, political stability, and voice and accountability. Corporate governance effectiveness is captured through board size, board independence, and ownership structure. Control variables include firm size, leverage, profitability, growth opportunities, industry type, GDP growth rate, and inflation rate. Empirical results reveal that regulatory quality and control of corruption exert the most statistically significant positive effects on corporate governance effectiveness, while political instability undermines board oversight quality. Firm size, profitability, and board independence reinforce governance outcomes, whereas high leverage and inflationary pressures erode them. The study contributes to the nascent literature on governance in frontier markets by demonstrating that institutional scaffolding is a necessary, though not sufficient, precondition for effective corporate governance in Nigeria. Policy implications underscore the urgency of judicial reforms, anti-corruption enforcement, and investor protection legislation as catalysts for improving governance quality in listed companies.