ABSTRACT
The research looks into the relationship between corporate governance and organizational performance., through the processes of research multiple variables are examined; the complex set of relationships between a Corporation and its board of directors, management, shareholders, stakeholders, customers, creditors and how effective Corporate Governance can improve the productivity of a firm.
Due to the nature of the research, the methodology used was focused on extensive interview, textbooks, journals and articles. Interview questions were focused on the variables that could affect the performance of a firm; textbooks, journals and articles were used as secondary data to have a past insight on how organizational performance affects a firm.
The research demonstrates that high governance risk correlates with lower performance, and robust governance is associated with more sustained performance. Companies with higher standards of governance were discovered to have higher performance). Further findings indicated that one of the more difficult things in assessing the influence of corporate governance upon firm performance is to take into account the impact of changes in the market: at times of rapid expansion many companies will perform well, in times of recession most companies will find it more difficult to perform.
Recommendations made focuses on improving the relationship between an organization, as a wholes and shareholders, stakeholders, management, creditors, and customers, through proper Corporate Governance. Once this is achieved to a certain degree, it will positively affect the level of performance of a firm, directly or indirectly.
TABLE OF CONTENT
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study ……………………………..1
1.2 Statement of the Problem ……..4
1.3 Objective of the Study ……………………………………………………..5
1.4 Significance of the Study ……………………………………………………..6
1.5 Scope of the Study ………………………………………………………6
1.6 Definition of Terms ………………………………………………………………7
1.7 Plan of Study ………………………………………………………………8
CHAPTER TWO – LITERATURE REVIEW
2.1 An Overview of Corporate Governance …………………..……9
2.2 Models of Corporate Governance ……………………………………………..16
2.3 Mechanisms of Corporate Governance ……….40
2.4 Governance Structure ……………………………………………………………….42
2.5 Potential Role of Stakeholders in Corporate Governance ………49
2.6 Board of Directors and Corporate Governance ………….……..52
2.7 Board Organization & Structure ……………………………..61
2.8 Corporate Governance Systems in Different Countries ……………75
2.9 Quality of Corporate Governance and Firm Performance ………79
2.10 Corporate Social Responsibility ……………………………..80
2.11 Corporate Sustainability …………………………………………………..82
2.12 Corporate Governance in Nigeria ………………………83
2.13 Benefits of Corporate Governance …………..86
2.18 Summary …………………………………………………………………..88
- CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction ………………………………………………………..90
3.2 Research Methods …..……………………………………90
3.3 Methods of Data Collection ……………………………….99
3.4 Method of Data Analysis …………………………………………..104
3.5 Justification of Method ……………………………..109 - CHAPTER FOUR – DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Introduction ……………………………………………..110
4.2 Interpretation of Data ……………………………………….113
4.3 Summary of Analysis ………………………………………………….126 - CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary ……………………………………………………130
5.2 Conclusion …………………………………………..133
5.3 Recommendation ………………………………137 - Bibliography …………………………………………………….141
CHAPTER 1
INTRODUCTION
BACKGROUND OF THE STUDY
The institutions of governance provide a framework within which the social and economic life of countries is conducted. Corporate governance concerns the exercise of power in corporate entities.
Corporate Governance is the key foundation for firms to be more productive and have a long existing product life cycle. The levels of institutional collapse and firm’s failure worldwide from unforeseen circumstances, there have been new concepts or theories on how an organization should effectively run.
Through past researches it has been observed that the Management of firm and survival of companies are associated with the type of Management that is in place and the global competitive environment requires sound corporate governance.
This research study will examine the effects of healthy corporate governance in an organization. It looks into the factors necessary to achieve successes in relation to the Board of Directors of an organization; Corporate Ethics; Mechanisms of Corporate Governance; Responsibilities of Shareholders; Structure and Responsibilities of a Board; and Organization of Audit.
This research focuses on Corporate Governance in the Nigerian Organizations and it looks into ways in which mechanisms in relation to Corporate Governance can be put into place to achieve proper Management, so as to achieve effective productivity.
Nigeria is not left out in the campaign for proper Corporate Governance, especially with recent events of Nigerian Banks closing down or Banks being crippled through unprofessional decisions made by those on the Board.
This approach not only narrows the dimensions of corporate governance to a restricted set of interests, as a result it has a very limited view of the dilemmas involved in corporate governance. There are competing corporate governance systems in the market based Anglo-American system; the European relationship based system; and the relationship based system of the Asia Pacific (Clarke 2007). This diversity of corporate governance systems is based on historical cultural and institutional differences that involve different approaches to the values and objectives of business activity. Furthermore the importance of strategic choice in the determination of governance systems “Entrepreneurs, investors and corporations need the flexibility to craft governance arrangements that are responsive to unique business contexts so that corporations can respond to incessant changes in technologies, competition, optimal firm organization and vertical networking patterns…To obtain governance diversity, economic regulations, stock exchange rules and corporate law should support a range of ownership and governance forms”.
The OECD provides the most authoritative functional definition of corporate governance:
“Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance.”
However corporate governance has wider implications and is critical to economic and social well being, firstly in providing the incentives and performance measures to achieve business success, and secondly in providing the accountability and transparency to ensure the equitable distribution of the resulting wealth. The significance of corporate governance for the stability and equity of society is captured in the broader definition of the concept offered by Sir Adrian Cadbury (2002): “Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.” It is therefore logical to study the influence of Corporate Governance mechanism on performance of companies.
