Moderating Influence of Financial Sustainability on the Nexus between Corporate Governance Mechanisms and Financial Performance in Nigerian Deposit Money Banks

This study examines the effect of corporate governance mechanisms—board composition, board size, audit committee independence, and audit committee meetings—on the financial performance of listed deposit money banks in Nigeria, while assessing the moderating role of financial sustainability. An ex-post facto research design was adopted using secondary panel data from listed Nigerian banks. Data were analysed with the Generalszed Least Squares (GLS) Random Effects model, incorporating robust (Huber- White) standard errors to address heteroscedasticity and cross-sectional variation. The moderating effect of financial sustainability on the governance–performance relationship was also tested. The findings reveal that board size has a statistically significant negative effect on financial performance (p < 0.05), suggesting that excessively large boards may reduce efficiency and weaken effective oversight in Nigerian banks. In contrast, board composition, audit committee independence, and audit committee meetings show no significant influence on financial performance. Furthermore, the interaction effects between financial sustainability and each governance variable are insignificant, indicating that financial sustainability does not moderate the relationship between corporate governance mechanisms and financial performance. Overall, the model explains approximately 31.6% of the variation in financial performance. The study is limited to listed deposit money banks in Nigeria, which constrains the generalizability of the findings to non-listed or smaller financial institutions. Reliance on secondary data also limits control over the measurement of some governance variables. Practically, the results suggest that regulators and policymakers should focus on optimising board size and improving governance efficiency rather than expanding board membership. Socially, efficient governance structures enhance banking stability, investor confidence, and depositor protection. The study contributes to the literature by demonstrating that financial sustainability does not strengthen governance–performance linkages in the Nigerian banking sector, emphasising governance quality as the primary driver of financial performance.