Moderating Role of Executive Compensation on Employee and Chief Executive Officers' Ownerships and Market Value of Listed Consumer and Industrial Goods Firms in Nigeria

Abstract

One of the critical challenges affecting the market value of firms in Nigeria is the intricate relationship between corporate governance mechanisms, particularly ownership structures and executive compensation frameworks. This study explores the moderating role of executive compensation in the relationship between employee and Chief Executive Officer ownership and the market value of listed consumer and industrial goods firms in Nigeria. The study population comprises thirty-four (34) consumer and industrial goods firms listed on the Nigerian Exchange Group as of December 31, 2024. A purposive sampling method was employed to select twenty-six (26) firms with consistent disclosures over fifteen years (2010–2024). Utilizing a longitudinal panel research design, the study applied panel least squares and panel EGLS (random effects) regression analysis using E-Views 12 software. The results indicate that while employee and CEO ownership alone do not have a statistically significant effect on firm market value, their interaction with executive compensation has a positive and significant effect. The study concludes that executive compensation serves as an essential strategic moderator, aligning managerial incentives with shareholder interests, thus enhancing firm market value. The study recommends that boards of listed firms should adopt performance-based compensation schemes and that regulatory bodies enforce stricter disclosure of ownership-incentive alignments to improve market valuations and promote sustainable governance practices in Nigeria's consumer and industrial goods sectors.