Corporate Governance Quality Index Construction and Firm Performance: Evidence from the Nigerian Exchange Group

This study develops and validates a composite Corporate Governance Quality Index for Nigerian listed firms and examines its empirical relationship with firm performance on the Nigerian Exchange Group. The construction of governance indices offers a methodological advance over single-variable proxies by capturing the multi-dimensional nature of governance quality. Existing governance indices applied in Nigerian studies have relied predominantly on datasets limited to financial sector firms or have used governance dimensions developed in developed market contexts, limiting their contextual validity. Drawing on principal component analysis, this study constructs a multi-dimensional governance index using twenty-two governance attributes across board structure, shareholder rights, transparency and disclosure, audit quality, and remuneration governance dimensions for forty-five listed firms over six years. The index is validated using confirmatory factor analysis. Firm performance is measured using both accounting-based metrics (return on assets, return on equity) and market-based metrics (Tobin's Q). Panel data regression with random effects addresses heterogeneity across firms. The study contributes a validated, Nigerian Exchange Group-specific governance measurement tool to the literature, filling a methodological gap. Results are anticipated to demonstrate a significant positive relationship between composite governance quality and market performance, with specific governance dimensions varying in explanatory power by industry sector. Keywords: governance quality index, firm performance, Nigerian Exchange Group, corporate governance, index construction.