Corporate Governance and Decline Lifecycle Stage Likelihood: A Lifecycle Approach

Abstract

This study investigates the effect of corporate governance structure on the likelihood of firm decline life cycle stage among listed oil and gas firms in Nigeria, within the framework of organizational life cycle theory. Specifically, it examines how board size, board independence, board gender diversity, and staggered board structure influence firms’ transition into decline phase, conceptualized as a strategic state distinct from financial distress. Adopting a longitudinal panel research design, the study utilizes secondary data from six (6) listed oil and gas firms over the study period and employs rare event logistic regression technique to account for the low incidence of decline-stage observations. The findings reveal that board size and board independence do not exert significant influence on the likelihood of firm decline, suggesting that structural board composition alone may not sufficiently explain deterioration dynamics in capital-intensive environments. In contrast, board gender diversity exhibits a positive and statistically significant relationship with decline-stage likelihood, indicating that increased female representation is associated with transitional governance conditions rather than direct decline mitigation. Furthermore, staggered board structure demonstrates a significant negative effect, implying that board continuity enhances firms’ resilience and reduces the probability of entering decline stage. The study contributes to the literature by extending corporate governance analysis beyond financial distress to a life cycle-based decline framework and by providing evidence from a developing, resource-dependent economy. It underscores the need for governance reforms that prioritize board effectiveness, strategic continuity, and contextual competence over mere structural compliance.