Stockbroking firms play a fundamental role in a country’s capital market system. The performance of stockbroking firms is generally perceived as low by their customers. It was therefore, necessary to find out the extent to which this was true and the role played by organizational characteristics such as leadership style, employee trust, and information culture. It is in light of this that the study examined how leadership style, employee trust and information culture contributed to the performance level of stockbroking firms in Nigeria.

The survey design was used. The target population consisted of 1,222 employees from 184 stockbroking firms in Nigeria. Proportionate stratified sampling technique was used to select 606 employees from 94 stockbroking firms. A validated questionnaire was the instrument used for data collection. Reliability coefficient of each of the variables ranged from 0.74 to 0.89. Response rate was 85%.  The data were analysed using descriptive statistics and regression. 

The study showed a significant influence of leadership style on organizational performance  = .178; p < 0.05); likewise, employee trust showed a significant influence on organizational performance  = .156; p < 0.05) and information culture also showed a significant influence on organizational performance (  = .190; p < 0.05). The combined influence of leadership style, employee trust and information culture on organizational performance was significant = .193, F(3,511) = 41.88,  p < 0.05). The isolated influence of positive intention as an indicator of employee trust on organizational performance was not significant (β = 0.380; t = 0.879; p  >  0.05).  Likewise, information sharing (β = 0.001; t = 0.017; p > 0.05) information transparency (β = 0.027; t = 0.534; p > 0.05) and information control (β = -0.094; t = -1.960;   p  <  0.05) as indicators of information culture did not contribute significantly to organizational performance of stockbroking firms in Nigeria.

The study concluded that factors such as leadership style, employee trust, and   information culture contributed to the low performance of stockbroking firms in Nigeria. It recommended that in order for stockbroking firms to perform optimally, the Nigerian Stock Exchange and Security and Exchange Commission should orientate managers of stockbroking firms on the need to be transformational in leadership style display, encourage teamwork and allow their employees to be innovative and improve on their organizational information culture.

Keywords:      Leadership style, Transactional leadership, Transformational leadership,

Employee trust, Information culture, Organizational performance, Stockbroking firms

Word Count: 384


Content                                                                                                                       Page

Title Page                                                                                                                    i

Certification                                                                                                                ii

Dedication                                                                                                                  iii

Acknowledgements                                                                                                    iv

Abstract                                                                                                                      v

Table of Contents                                                                                                       vi

List of Tables                                                                                                              ix

List of Figures                                                                                                             x

Abbreviations                                                                                                              xi


  1. Background to the Study                                             1
    1. Statement of  the Problem                                  8
    1. Objective of the Study                                             9
    1. Research Questions                                                   9
    1. Hypotheses                                                                 10
    1. Scope of the Study                                                      10
    1. Significance of the Study                                          11
    1. Operational Definition of Terms                            11


2.1      Organizational Performance of Stockbroking Firms    13

2.2      Leadership and Leadership Style                                           22

2.3      Employee Trust in Organizations                                  25

2.4      Information Culture of Organizations                  31

2.5      Leadership Style and Organizational Performance     35

2.6      Employee Trust and Performance of Organizations             38

2.7      Information Culture and Organizational Performance 40

2.8      Theoretical Framework                                                                         41

2.8.1   Balance Scorecard Theory of Organizational Performance  41

2.8.2   Transformational-Transactional Leadership Style Theory    45

Content                                                                                                                       Page

 2.8.3  Nico Martin’s Model of Employee Trust                                      48

2.8.4   Information Orientation Theory                                       51       

2.9      Conceptual Model                                                                                            56

2.10    Appraisal of Literature                                               60


3.0      Introduction                                                                                                     63

3.1      Research Design                                                                                               63

3.2      Population                                                                                                        63

3.3     Sample size and sampling Technique                               64

3.4      Research Instrument                                                          65

3.5     Validity and Reliability of Research Instrument              66

3.6      Data Collection Procedure                                                      66

3.7      Method of Data Analysis                                                                                 67

3.8       Ethical Considerations                                                                                    67


4.0      Introduction                                                                                                     68

4.1      Respondents’ Demographic Characteristics                         69

4.2      Analysis of Research Questions                          71

4.3      Test of Hypotheses                                         78       

4.4      Discussion of Major Findings                                         83


5.0      Introduction                                                                                                     90

5.1      Summary                                                                                                          90

5.2      Conclusion                                                                                                        91

  • Recommendations                                                                                            92
    • Implication of the study                                   93

Content                                                                                                           Page

5.5      Contribution to Knowledge                                                    93

5.6      Suggestion of Further Studies                                                94

REFERENCES                                                                                              95       

APPENDIX I                                                                                                  120


Table                                                                                                     Page

3.1:            Population of Employees of Stockbroking Firms in Nigeria 63

3.2:            Return Rate of Questionnaire Distributed                  64

4.1:            Questionnaire Return Rates                                        69       

4.2:            Demographic Information of Respondents     71

4.3:            Frequency Count, Mean and Standard Deviation of the level of organizational Performance by respondents.                73       

4.4:            Frequency Count, Mean and Standard Deviation of the leadership  style existing in stockbroking firms in Nigeria.           75             

4.5:            Frequency Count, Mean and Standard Deviation of employee trust existing in stockbroking firms in Nigeria.                 77                        

4.6:            Frequency Count, Mean and Standard Deviation of Information Culture Prevalent in Stockbroking Firms in Nigeria.                     79       


Figure                                                                                                              Page

2.1:     Four Perspectives of Kaplan and Norton’s Balanced Scored 42Card to determine  Performance in a Firm.                          

2.2:     Martins’ Model on the conceptualization of trust in an Organization 52

2.3:     Expanded model of the information orientation theory                     

2.4:     Conceptual Model on Leadership Style, Employee Trust,Information Culture  and Organizational Performance    56


BSC-Balance Score Card

BTI-                           Behavioral Trust Inventory

CIMA –           Chartered Institute of Management Accounting

CIS- Chartered Institute of Stockbrokers

CSF-                            Critical Success Factor

IBV-                            Information Behavior Values

ICAN-                         Institute of Chartered Accountants of Nigeria

IIBF-                           International Institute of Banking & Finance

IMP-                            Information Management Practices

IT-                               Information Technology

ITP-                             Information Technology Practice

KBEM-                       Kanji Business Excellence of Model

KBSC-                        Kanji Business Score Card

NSE-                           Nigerian Stock Exchange

OPI-                            Organizational Performance Index

R & D-                        Research and Development       

ROA-                          Return on Assets

SEC-                           Securities and Exchange Commission



1.1       Background to the Study                                                                            

Performance of firms has generated much controversy among scholars over time owing to its sensitivity. Since organizations play a basic and crucial role in day to day lives of people, the conceptual consensus among scholars is that performance of firms could be understood from two perceptions – financial and non-financial indices. Elements of financial indices in this context are of the following: profit sharing, market share, return on sales and   growth rate. On the other hand, it is believed that these financial indices alone will not determine the true performance level of a firm considering the fact that there could be distortions of figures and facts, and that there is every tendency that organizational heads may want to present impressive and enticing figures to customer or clients so as to gain more patronage from them. It is also believed that non-financial indices will go a long way in truly determining the performance level of an organization. Some of these non-financial components are: innovation, teamwork, employee satisfaction, perceived profitability and effective service delivery.  

Technological, managerial, market and process innovation are some forms of innovation identified to serve as innovative constructs that will enhance the performance level of an organization. Gunday, Ulusoy, Kilic and  Alpkan (2015) are of the view that the introduction of all forms of innovation will contribute to an organization’s performance level. Also, the welcoming and application of innovative ideas by the management of an organization from its employees has been argued by scholars to serve as a platform for enhancing organizational performance.

Satisfaction with monthly wages, favorable working condition, organizational policies and incentives are intangible asset that contribute to how satisfied employees are with their job. Though often treated as a major construct of study, scholars have empirically proven that employee satisfaction is a strong component of organizational performance (Latif, Ahmad, Qasim, Mushtay, Ferdoos & Naeem, 2013). In some quarters, employee satisfaction is interchangeably used for job satisfaction. The major premise of the school of thought in this context is that when workers are dissatisfied with their jobs, they become docile in terms of carrying out various tasks assigned to them and this could in turn affect the performance level of the organization negatively. It is however believed that when organizational heads have the interest of their employees at heart and they put all necessary apparatus in place to foster the welfare of their employees, maximum performance will be gained by the organization since employees are the major backbone of a firm.

Teamwork plays a crucial role in enhancing organizational performance. Teamwork effectiveness could be used as a tool by organizations to remain competitively relevant in contemporary times. Abdul-Azeez, Olateju, Ibrahim and Remi (2009) revealed that when employees and managers of firms work as a team, they break grounds because difficult tasks are easily solved and brainstorming on issues posing as threat to the survival of their organizations becomes highly effective. Employees in high flying organizations that always work together as teams will continue to remain in business, due to the fact that an atmosphere of coherence has been created, thereby providing an enabling environment whereby even the least employee in the firm is encouraged to offer constructive solution to difficult tasks.

A performing firm has a lot to do with effective and efficient way of rendering services to clients.  The way and manner customers are attended to determine how long they will continue to patronize that firm.  Talib and Ali (2014) are of the view that when customers are satisfied with services rendered by an organization, they will continue to transact business with that organization which will in turn yield a positive turnaround for the firm. Service delivery is not only about rendering services to customers, but rather responding promptly to customer’s queries and organizing follow up programmes for clients. Also introducing strategies to curb frequent complaints from customers could be one fundamental way in which organizations will actually offer efficient services to their clients. This action will trigger high level performance.

Profitability is perceived as one fundamental way in which performance of a firm could be determined.  For companies to record high profit maximization, not only could this be achieved by sales and production, but also by prompt payment of dues to regulatory bodies governing activities of the organization, internal revenue generation by the organization and also being able to pay off any outstanding debt in due course of time. In most cases, financial result serves as an evidence to show that an organization is maximizing profit. However, Donaldson (2003) found that when organizations ethically carry out their daily business, there is tendency that  they will perform optimally. A performing organization must have been managed by an effective leader who enjoys the strong support of his followers, that is, the employees. This support must have been earned over time basically because certain traits and behaviors displayed by the leader must have gone down well with his employees.

Leadership as a concept has been affirmed to be one of the predictors of performance in all types of organization. It is fundamentally seen as the character trait of a leader to influence  people in achieving set goals (Karamat, 2013). However, leadership style is a behavior exhibited by an individual or the head of an organization coupled with his way of providing influence, implementing plans, and motivating people under his leading. There are basically two contemporary leadership styles that have gained the attention of researchers over time. These are transformational and transactional leadership styles. Transformational leadership style is that kind of leadership style exhibited by a person that influences and inspires (transforms) groups of individuals to attain astonishing aftermaths (Robbins & Coulter 2007). A transformational leader displays certain behavior  that enable him to win the hearts of his followers. These behavior serve as the four perspectives of transformational leadership style which are: idealized influence, inspirational motivation, intellectual stimulation and individual consideration.

Idealized influence is characterized by aspiration and intellect of undertakings, enforcing conceit in and amidst groups, and earning admiration of his followers while inspirational motivation is precisely a cohort of idealized influence and is associated with a leader being pragmatic, thus becoming a locus point by his followers. Intellectual stimulation as another component of transformational leadership creates and enables the inspiring of new ideas and emboldens them to depart away from the outdated ways of reasoning. This kind of leader is seen as one sponsoring aptitude, level-headedness, coherent thinking, problem solving and lastly, individual consideration, is associated with   evolving followers by tutoring and mentoring (Bass, 1985; Bass & Avolio, 1990). In this case, the leader instills and enables others develop their strong point, and listens courteously to others. Here, followers are pickled individually to raise their levels of mellowness and to enhance disciplined conducts of addressing their goals and experiments.

Transactional leadership focuses on leader-follower exchange. Followers carry out instructions based on the direction of their leaders and leaders in turn positively reward their efforts. Sadeghi and Pihie (2012) are of the view that transactional leaders allow followers to fulfill the leader’s own self-interest, minimize workplace anxiety and concentrate on clear organizational objectives such as increased quality, customer service, reduce costs and increase production. Certain facets have been identified to make up transactional leadership style and these are contingent reward, active management by exception and passive management by exception.

Contingent Rewards is a situation whereby transactional leaders contextualize aim to recompense, elucidate expectations, offer essential assets and deliver various kinds of rewards for fruitful performance. Their core emphasis on contingent rewards is hinged on precise, quantifiable, achievable, convincing, and judicious objectives for their subordinates. Active management   by exception is a situation whereby transactional leaders display the effort of their subordinates, deliberately observing nonconformities from guidelines and values and take curative action to prevent errors while passive management by exception is when transactional leaders intrude only when values are not realized.  They may even introduce punishment as a way of getting rid of unacceptable performance.

Findings on the influence between transformational, transactional leadership style and organizational performance Paracha, Qamar, Mirza, Hassan and Waqas (2012) have it that transformational leadership style had additional effect on organizational performance than transactional leadership style. Another fundamental factor that stimulates organizational performance is the level of trust that exists between employees and their superiors in an organization.

Employee trust has been a major phenomenon within organizational settings. It is seen as the level of mutuality that exists among employees and their superiors working for an organization. Absence of trust between employees and their superiors could actually lead to all sorts of chaotic scene in an organization and this could bring about low level performance in that organization. Paliszkiewicz (2010) is of the view that   trust is the belief that a party ‘a) will not act in a way that is hurtful to a trusting firm, b) will behave in such a way that  is favorable to the trusting organization, c) will act dependably, and d) will perform or answer in an obvious and mutually suitable style. According to him, trust will be understood to serve as a bond between previous practices and foreseen future. Widely accepted work on trust could be attributed to Martins (2000) who sees employee trust emanating from five dimensions namely: openness in communication, fair dealing with employees, honesty in keeping to promises, positive intention to employees and belief in management/superiors.

Openness in communication in an organization paves way for employees to have absolute trust in their superiors. When this is not in place, employees will begin to suspect their employers of not being transparent in their dealings with them. And when suspicion thrives in an organization, there is tendency that employees will no longer want to put their best in their jobs and this will culminate into low performance for the organization. Not being fair in dealing with employees especially in terms of being partial, witch hunting employees, deliberately seeking for an avenue to relieve workers of their jobs or deliberately looking out for mistakes of employees could make employees lose trust in their employers. Apart from being unfair in dealing with employees, not keeping to promises made by employers to their employees is also another way in which employees will lose their trust in their employers. Preference for a particular employee against another could bring about factionalism in an organization. This is closely associated with employers not having positive intention towards their employees and this could also make employees not to have faith or belief in the management of the organization. When all this is in place, low performance will always be the lot of that organization. Every organization deals with information – this is a key resource that adds values to an organization especially when utilized in an effective way. Its value as an asset to an organization has some form of root from the concept of information culture.

Information culture is a pattern of approaches and conducts that shows the psychological orientation of a firm towards information. Davenport and  Prusak (1997) believes that this culture is replicated in the corporation’s norms, values, philosophies and practices which impacts on the way information is alleged, formed and used. This implies that a well instituted information culture could impact on an organization’s performance level. The tenacity to assert the place of information culture in the administrative setting of a firm could give rise to the probe on information culture.  Though, as a concept not yet very popular, has every tendency of impacting significantly on organizational performance.

Information culture supports the culture of an organization in achieving set goals but it is mostly associated with a culture where the significance and effectiveness of information in attaining effective and tactical success accomplished is recognized. It is a culture where information constitutes the platform for organizational resolution making while exploiting information technology for enhancement. This is made possible by providing a platform through which information is put to maximal utilization. Choo, Bergeron, Detlor   and  Heaton (2008) is of the view that information culture and information use are intensely related. They believed that information culture defines information use when they asserted that information culture deals with informally collective outlines of behavior, standards, and value that define the implication and use of information where information integrity, formality, control, sharing, transparency and pro-activeness form the characteristic elements of information culture. It is noteworthy here that this is a distinctive kind of culture where information itself is the constituent of that culture.  In a study by Roberts, Rollins and Kristel (2005) on the influence of information culture on performance, reported that several of the indicators of information culture as listed above had a strong influence on performance. Among the indicators, identified were information integrity and information sharing where they claimed had the strongest significant influence on organizational performance.

In any part of the world, stockbroking firms play a fundamental role in a country’s capital market system. The Capital Market is simply a market where stocks, bonds, commodities, foreign exchange and even derivatives are traded to raise cash for government or businesses, reducing companies’ risks and increasing investors’ wealth. The capital market is the avenue through which funds are generated, mobilized and availed effectively and efficiently from investors to the users of funds. In the Nigerian context, active players in the capital market system consist of  the Nigerian Stock Exchange (NSE), Discount Houses, Development Banks, Investment Banks, Building Societies, Stock Broking Firms, Insurance and Pension Organizations, Quoted Companies, the government, individuals and the Security and Exchange Commission (SEC).

A Stockbroking firm is an organization that acts as an intermediary for stock market. It provides or offers investors various choices of services coupled with investment advice and also buys and sell equities on behalf of investors (Odita, 2011). The active players in a stockbroking firm are stockbrokers, administrators of the company and also marketers. Stockbrokers in Nigeria are licensed to carry out operations by the Securities and Exchange Commission (SEC). They are expected to operate within the ambit of the market. From observation, dishonest practices such as manipulation of customers’ accounts, buying and selling of stocks without the mandate of the client, not being transparent in dealing with clients etcetera are some of the ugly developments that have eroded the Nigerian Stock Market and have at the same time destroyed investors’ confidence in investing in the country’s stock market.  In line with keeping to best practices in terms of sanitizing the Nigerian Stock Market system and increasing the performance level of stockbroking firms, the SEC introduced certain operating standards in 2013 for stockbroking firms. These standards are: introduction of technological innovation practices, effective and efficient manpower and apparatus resources, workable organizational configuration and control, actual operational procedures and international effectiveness. The idea behind this is that if stockbroking firms comply and implement these operating standards, investors’ confidence will be hugely restored in investing in the nation’s stock market.

Stockbroking firms are still groping and trying to find their stability in living up to their core responsibility which is carrying out trading activities on behalf of their clients in the genuine way more so considering recapitalization policy introduced by the SEC in 2012 (Odita ,2010). With some stockbroking firms being unable to meet up to the recapitalization within the deadline of September 30th, 2015, many were advised by the SEC to merge with other stockbroking firms or redefine their financial responsibility status. With all these in place, the performance level of many stockbroking firms is still worth being questioned as there are many stockbroking firms   still unable to meet up with   the needs of their clients. This has really made many investors to nurse the feeling that stockbroking firms in Nigeria are under-performing.

This study is premised on the belief that a good measure of organizational performance and leadership style play a fundamental part in determining the performance level of firms. There are divergent leadership styles existing, but the most recent and more commonly spoken of are transformational and transactional leadership styles. Another intrinsic influence considered in this study is the relationship between employee trust and organizational performance. The influence will be examined from the perspective of employee trust indicators which are: openness in communication, fair dealing with employees, honesty in keeping to promises, positive intention to employees and belief in management and supervisors. Also, the last independent variable examined in this study is Information culture. This study posits that when organizations   have an information culture they perform better   in contributing to the performance level of firms. In the light of the forgoing, information culture will be examined from the perspective of information integrity, information formality, information pro-activeness, information transparency, information control and information sharing.

1.2       Statement of the Problem

Lack of innovation, poor service delivery, not meeting up with financial obligations, high level of dishonesty are certain negative occurrences that might have beclouded the smooth operations of stockbroking firms in Nigeria in recent times. These occurrences might have contributed to some form of low performance among these firms.  Issues with transparency in stockbroking firms might also bring about low employee trust which will also contribute to  low organizational performance. With prevailing sharp practices going on in stockbroking firms in Nigeria, employees of these firms may no longer trust the management of their firms and also see their managers as bad influence not only on their own personal self but also on the country at large.

Organizations that do not have a culture of information practice might tend not to perform well. In the  case of stockbroking firms, there have been reported cases of managers not divulging sensitive information to their employees basically because of the shady deals they get involved in and when discovered make them become  disrespectful and misbehave at the workplace. This disposition could go a long way in contributing to the low performance of any firm. However, factors like leadership styles, employee trust, and information culture have been shown to influence organizational performance of financial institutions. The extent to which these factors contribute to organizational performance of Nigerian Stockbroking Firms is not known yet. Hence, this research work seeks to establish the influence of leadership styles, employee trust and information culture on the organizational performance of stockbroking firms in Nigeria.