Rules, auditors and environmental policies did not lift Nigerian banks’ market value

What the bank data showed

None of the three external governance measures—regulatory oversight, external audit quality and environmental governance—significantly affected corporate value as measured by Tobin’s Q. Regulatory oversight had a positive association with value, but it was not statistically significant. External audit quality and environmental governance had negative, also statistically insignificant, associations. Among the control variables, firm size and leverage were significantly associated with lower corporate value, while profitability had a positive but statistically insignificant relationship.

Why market value matters

The findings suggest that having governance rules, external audits and environmental practices in place does not automatically produce a higher market valuation for Nigerian banks. The researchers argue that effectiveness, enforcement, disclosure credibility and investor response may matter more than formal compliance alone. They also suggest these arrangements may contribute more to monitoring, transparency, accountability and institutional legitimacy than to immediate market-value gains.

Evidence and caveats

The study used a longitudinal panel analysis of 11 listed Nigerian banks, producing 154 firm-year observations from 2012 to 2025. It used regression methods designed to account for issues including unequal variance, repeated observations over time and differences between institutions, while controlling for firm size, leverage and profitability.

The sample was small and limited to banks with complete data, so the results may not generalize to other sectors or countries. Regulatory oversight was measured mainly through an index based on the Central Bank of Nigeria’s corporate-governance code, rather than all relevant regulators and enforcement processes. The study also examined only three outside governance mechanisms and used Tobin’s Q as its measure of value; other governance factors or accounting-based measures could produce different results.