Abstract
The project examines the link between financial
accounting and corporate governance in Nigeria. The study main objective is to
reveal the relevance of financial accounting theory and corporate governance or
corporate performance. This work explains the level of compliance of firms to
government regulation as it affects their governance practices. The primary
source of data collection was used in gathering data from respondents. A
structured questionnaire was designed by the researcher which was used to
capture the relationship between corporate governance and financial accounting.
The study concludes that accounting researchers should move beyond thinking
about accounting information as providing a high degree of influence over the
government practices of firms. Based on the findings, the study recommends that
accounting information should be well structured and unique so that it can be
useful in specific governance mechanism.
TABLE
OF CONTENTS
Title
Page i
Certification
ii
Dedication
iii
Acknowledgements
iv
Abstract
v
Table
of Contents vi
Chapter One: Introduction 1
1.1
Background to the Study 1
1.2
Statement of Problems 5
1.3
Research Questions 5
1.4
Objectives of the Study 6
1.5
Statement of Hypothesis(es) 7
1.6
Significance of the Study 8
1.7
Scope of the Study 9
1.8
Limitation of the Study 10
1.9
Definition of Terms 11
Chapter
Two: Review of Related
Literature 12
2.1
Introduction 12
Chapter
Three: Research Method and Design 41
3.1
Introduction 41
3.2
Research Design 42
3.3
Description of Population of the Study 42
3.4
Sample Size 43
3.5
Sampling Techniques 43
3.6
Sources of Data Collection 43
3.7
Method of Data Presentation 44
3.8
Method of Data Analysis 45
Chapter
Four: Data Presentation, Analysis
and
Hypothesis Testing 47
4.1 Introduction 47
4.2 Data Presentation 47
4.3 Data Analysis 48
4.4 Hypothesis Testing 65
Chapter
Five: Summary of Findings, Conclusion
and
Recommendations 72
5.1
Introduction 72
5.2 Summary of Findings 73
5.3
Conclusion 76
5.4
Recommendations 78
References
81
Appendices 87
CHAPTER ONE
INTRODUCTION
1.1
Background
to the Study
Corporate governance has been recognized and
receiving a lot of attention in recent times. Corporate governance is not a new
issue and has evolved with the growth of capitalist and the development of
world economics. Corporate governance is concerned with overall polices,
control, laws and numbs by which a corporation is directed, administered,
control for the general interest of the shareholders.
It aimed at understanding the dynamics or system
put in place for the main objective to achieving corporate goals and recognition.
These systems are currently refers to as mechanism of corporate governance. The
way and manner a corporate entity is been governed and directed is determined
by several factors of success and growth. According to Chatu (1999), in a brief
note address at the economics of Asian crisis and corporate economics
government reforms 1999, (even the strongest economics lacking transparent
transformation and control, responsible corporate board and good directors and
shareholders right can collapse quite quickly as investor confident collapses.
Thus, replying that there is a need for the understanding and implementation of
good corporate governance practices and procedures.
At it broadest, corporate governance encompasses
the framework of rules, regulation, relationship, systems and procedure within
and by which fidicious authority is exercised and governed in corporation
(Wikipedia Root, 2006). Corporation practices should be made in such a way as
to optimized result. Corporate governance has evolved as a result of the
separation on ownership from management of corporation, enterprise and
including some partnership ventures. This has called for the need to protect
the image and interest of shareholders and their nonparticipating share holders
of corporation.
Sheifer and Vishny (1998) were of the opinion that
management and equity investors should be capable of going into a binding
contract, which could ensure that investors and shareholders interest are fully
guided and represented. The relationship between owners and managers of
business entities is considered as principal agency relationship (Oyajide &
Soyibo, 2001, p.2), according to them, the principal agency literature
suggested that hired manager will not have the same objective, role and profile
as the private investor (owners). Rather, they will use the firm specific rent
to satisfy their own desired objectives and interest. This has resulted in the
development of various governance codes and method and other regulated agencies
to protect the interest of shareholders and enhance effective governance.
1.2
Statement
of Problem
Corporate governance is a multi-connected area of
study. An important aspect of which deal with accountability, fiduciary duty
and dynamics of auditing and control recently. There has been a considerable
interest in the corporate governance practices and performance of most modern
corporation and entities, especially since the high profile collapses of firm
as Enron Corporation which shock the entire economy of the United States
(Wikipedia 2008) this has raised so many eye brows as to the governance in most
organizational setting and its effect on corporate performance and the entire
economy.
1.3 Research
Questions
The research provides the following questions to
guide the objectives of the study.
1. What
is the relevance of financial account information in corporate governance via -
corporate performance?
2. Of
what role is the government and other self regulating in corporate governance
of firm and companies?
3. Is
accounting conservation having an importance in a well functioning corporate
governance practices and ethics?
4. Is
there any relationship between the way a particular firm is directed and the
firm’s performance?
1.4 Objectives
of the Study
Based on the above problem, the purpose of the
research work among others thing is to:
1. To ascertain the relevance of financial accounting in corporate
governance vis-à-vis corporate performance
2. To
elaborate the role of government and other self regulated body in corporate
governance of firms and companies.
3. To
determine whether accounting conservation have importance in a well functioning
corporate governance.
4. To
ascertain if there is any relationship between the way a particular firm is
directed and the firm’s performance.
1.5 Statement
of Hypotheses
Hypothesis
One
Ho: The firm’s
performance is not directly dependent on its accounting practices.
HI: The
firm’s performance is directly dependent on its accounting practices.
Hypothesis
Two
Ho: There is no
significant difference between corporate governance of firms and their
performance.
HI: There is
significant difference between corporate governance of firms and their
performance.
Hypothesis
Three
Ho: Company
policies are not for the best interest of its stakeholder.
HI: Company
policies are for the best interest of its stakeholder.
Hypothesis
Four
Ho: Government
regulations are inadequate in terms of its influence on corporate governance
practices of corporation in Nigeria.
HI: Government
regulations are adequate in terms of its influence in corporate governance in Nigeria.
1.6 Significance
of the Study
Corporate governance is one of the essential
components of building and healthy investment climate and boosting investor
confidence. Effectiv e corporate governance is no longer desirable but rather
mandated as transparency and consistency enforcement has been recognized as a
key player to increasing investment in the business world. As the researcher
attempts, there is a strong nexus between good corporate governance and
increasing investment and economic growth in accounting. Countries that wish to
reap the benefits of global capital market and companies that want to attract
patient long term capital, must foster corporate and increasing investment and
economic growth in accounting practices and aligned with well understanding
investors’ rational international expectation. There is ample evidence that
companies with well defined stakeholders right, solid control environment, high
level of transparency and disclosure and an empowered board of directors, have
no trouble attracting investors and lenders.
The following stand to benefit from the research:
1. Researcher: Researcher in the field can
make used of the research project. As it may serve as a guide for others
interesting researchers in the future. There can also enhance or update the
research work in time to come, bearing in mind that as a result of the broadness
and dynamic to corporate governance. The researcher work will not expose all
there is to known about corporate governance as it relate to financial
accounting.
2. The
government: The research
project will help governor and government to improve on present laws, reforms
and regulations of its countries and it’s citizenry to corporation. This is by
providing them current problems with corporate governance system in
organization.
3. Student:
The researchers guide a general views and
understanding of corporate governance. This will enhance the awareness and
knowledge of student with regard to the concepts of good corporate governance.
4. Shareholders/Business Financers: As a result of the separation stakeholders
influence from maximum control in modern organization, a practices of corporate
governance is implemented on behalf of shareholders to reduced agency cost and
information asymmetry (Wikipedia 2008).
This separation of ownership from control has made
it mandatory for owners of business (shareholder) to have an understanding to
of organization is being manage and directed.
5. The
General Public: The researcher is beneficial to members of the public by
providing them with an accurate understanding of the meaning, purpose and
impact of effective corporate governance as it may deemed fit and how it affect
firms in particular and the entire economy.
1.7 Scope
of the Study
This study examines the relevance of
financial accounting information in corporate governance vis-à-vis corporate
performance. The study explains the key areas through corporate governance and
other self regulation in the corporation of firms and companies in Nigeria
between 2008 – 2013.
For
the course of this study, the researcher used a high sample size of 80 for
effective survey.
The research is based on the survey of companies
in Nigeria,
selected for the purpose to the research following a non-probability sample
process.
1.8 Limitation
of the Study
In the course of this research, some
problems were encountered which include the following:
i.
Insufficient books in the library
limited the effort of the researcher in carrying out an in-depth research on
the project work.
ii.
Another limitation is that some of the
information or answers given in the questionnaire are incomplete.
iii. Also, long distance or appropriate place of
interest to obtain relevant information was a problem encountered.
1.9 Definition of Terms
1.
Corporate
Governance: This is the way in which companies are
directed and controlled.
2.
Management:
This is the decision makers in an organization and they also give direction
that lead to be adhered to.
3.
Stakeholders:
These are individuals or groups of people who have financial and economic
interest in any organization.
4.
Shareholders:
These are the owners of the company. They try as much as possible to protect
the ongoing concern on the company.
5.
Accounting:
Accounting can be defined as a systematic identification of measuring,
recording, classifying, summarizing, interpreting and communication of financial
or economic information so as to enable the users of the information make
informed judgement thereof.
6.
Integrity:
This is required in order not to mislead those who will have belief in and rely
on the audited financial statement of an organization.
7.
Auditing:
This is a systematic process of objectively obtaining and evaluating evidence
regarding the economic activity of an organization.
8.
Financial
Statement: These are stewardship accounts rendered by
directors who are professional managers to the members of a company.
9.
Accounting
Information: These are financial records needed by
directors and other accounting users to enable them know the financial position
of the organization.
10. Forensic Accounting:
This is the use of accounting skills to investigate fraud or embezzlement and
to analyze financial information for use in legal proceedings.
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