Abstract
The project examines the Corporate Governance and
Business Failures in Nigeria:
A Focus on the Nigerian Banking Industry. The study main objective is to find
out the relationship between corporate governance and business failure. The
primary source of data collection was used in gathering data from respondents.
A structure questionnaire was designed by the researcher and validity by two
experts from the statistics department was used to obtain data and chi-Square
(X2) was used to test hypotheses formulated. It
was discovered that business failure in Nigeria are caused by poor
corporate governance. It also found that government and corporate codes i.e.
best practices play a crucial role in the corporate governance of firms. It was
concluded that the different roles of the participants in corporate governance
are pre-requisite for the survival of a firm. As a way of recommendation,
corporate Nigeria
therefore needs to raise the consciousness and institutionalize good corporate
governance and business sustainability beyond lip service.
TABLE OF CONTENTS
Title Page
Certification
Dedication
Acknowledgments
Abstract
Table of Contents
Chapter
One: Introduction
1.1
Background to the Study
1.2
Statement of Problem
1.3
Research Questions
1.4 Objectives of the Study
1.5
Statement of Hypotheses
1.6 Significance of the Study
1.7 Scope
of the Study
1.8
Limitations of the Study
1.9
Definition of Terms
Chapter
Two: Review of Related Literature
2.1 Introduction
2.2
Overview
of Corporate Governance
2.3 Why do
Organization Exist
2.4 Theories
of Corporate Governance
2.5 Codes of Corporate
Governance
2.6 Principles
of Corporate Governance
2.6.1 Rules and Principles as a Tool of
Corporate Governance
2.6.2 Challenges and Acceptable Principles of Corporate
Governance
2.7
Pillar
of Corporate Governance
2.8 Essence of Good Corporate
Governance
2.9 Problem
of Corporate Governance
2.10 Participants
and their Roles in Corporate Governance
2.11 Shareholder/Investors’
Grievance Committee
2.12 Audit Committee
2.12.1 Role of the Audit Committee
2.12.2
Auditor’s Certificate on Corporate
Governance
2.13 Corporate Governance Structure
2.14 Corporate
Failure
2.14.1 Types of Failure
2.14.2 Causes of Failure
2.14.3
Symptoms of Failure
2.15
Dealing with Failure
2.16 A Look at the Cadbury Nigeria Plc Saga
Chapter
Three: Research
Method and Design
3.1
Introduction
3.2 Research design
3.3
Description of the Population of the
Study
3.4 Sample Size
3.5
Sampling Techniques
3.6
Method of Data Collection
3.7
Method of data Presentation
3.8 Method of Data Analysis
Chapter
Four: Data Presentation,
Analysis
and
Hypothesis testing
4.1
Introduction
4.2
Presentation of Data
4.3 Data Analysis
4.4
Hypothesis Testing
Chapter
Five: Summary of Findings, Conclusion
and
Recommendations
5.1
Introduction
5.2 Summary of Findings
5.3
Conclusion
5.4
Recommendations
References
Appendix I
Appendix II
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
Long
before the highly publicized corporate scandal and failures worldwide, the
global community has shown increasing concern on the issue of corporate
governance.
The
reason for this trend is viewed from the perspective that corporate governance
is about ensuring that the business is run well and investors receive a fair return
(Magdi & Nadereh, 2002).
According
to Wolfensohn (1999) and Akinsulire (2006), the distribution of rights and
responsibilities amongst different participants such as the board, managers,
shareholders and other stakeholders in spelling out the rules and procedures
for making decision on corporate affairs is basically specified by the corporate
governance structure.
Another
school of taught viewed corporate governance from two perspectives:
A
“Narrow’ one that basically concerned with the structure within which a
corporate entity or enterprise receives its basic orientation and direct ion
(Rwegasira, 2000).
A
“Broad” perspective that is regarded as the heart of both a market economy and
a democratic society (Sullivan, 2000).
However,
these ideologies have been compromised and the resultant effect t is seen in
prob5ressive increase in mortality rates of hitherto global corporate giants in
developed economies.
Enron, Pamalat, Barynx Bank and WorldCom are recent and vivid examples and as
such the study intends to examine these issues and suggest the way forward.
1.2
Statement of Problem
In
Nigeria
like most countries, the failure of companies can be due to internal or
external factors or in rare cases, the combination of both which basically has
to do with poor corporate governance.
The
researcher intends to focus on reforms as aspect of corporate governance and
indicators of business failure as well as the linkage between the two concepts.
The
study also intends to raise the consciousness and institutionalize good
corporate governance and business sustainability.
For
effective corporate governance reduces “control rights” shareholders and
creditors confer on managers, increasing the probability that managers invest
in positive net present value projects (Shieifer & Vishny, 1997).
1.3
Research Questions
The
following questions direct the thrust of the study:
i. Is there any significant relationship
between corporate governance and business failure?
ii. What is the role of the participants in
corporate governance structure as regard business failure?
iii. What
are the roles played by corporate governance participants?
1.4
Objective of the Study
i. To find out if there is any significant
relationship between corporate governance and business failure.
ii. To find out the relationship between
participants in corporate governance structure and business failure.
iii. To find out the role played by corporate
governance participants.
1.5 Statement of Hypothesis
Hypothesis
One
HO: There is no
significance relationship between corporate governance and business failure.
HI: There is a significance relationship between
corporate governance and business failure.
Hypothesis
Two
HO: There is no significant
relationship between business failure and the role played by corporate governance
participants.
HI: There is a significant relationship between business
failure and the role played by corporate governance participants.
1.6
Significance of the Study
In regards to the
relevance of the study, it covers areas which are useful to the board of
directors as regards to their mission, vision, objectives and strategy of a
company. It is relevance to shareholders by boosting their confidence to invest
in a particular business which involves protecting their rights.
Companies will benefit
as it ensures the financial viability of business. It also indicates the way in
which companies are directed and controlled through basic governance principles
of disclosure and accountability of a company. It is also relevant to the
public sector. Public sector will benefit as it will ultimately improve
economic growth and functional position of the country on a global level. It is
also used as a determinant in developing policy, social economic analysis and
poverty resolute issue.
1.7
Scope of the Study
The
study is not directed at explaining or providing solutions to all corporate
failures in Nigeria
because some failures are actually outside the organization’s frontiers.
It
is narrowed down to those failures that could be averted if organization would embrace
corporate codes and play by the rules.
The
geographical scope of this study is Nigeria
and Edo State in particular and a sample size of
96 was used.
1.8 Limitations of the Study
Corporate
governance is not a physical phenomenon, so it cannot be measured ordinarily as
there are different dimensions to the concept.
The factors that
militate against the researcher’s ability to come out with concrete findings
during the course of researching includes:
a.
Lack of
necessary materials: The materials sought were not sufficient for the research
as for text works and business journal needed were not gotten at the right
time.
b.
The problem of
retrieving the questionnaire: Some questionnaires issued to respondents were
lost during the attitudes of the respondents to disclose their personal
information.
1.9
Definition of Terms
1. Corporate
Governance: It is the system by which business
corporations are directed and controlled (OECD, 1999)
2. Business
Failure: It is a situation in which a company finds itself
unable to generate enough funds both internally and from outside source to
finance its operations (Osaze & Anao, 1990).
3. Corporate
Governance Structure: This constitutes yardsticks by which
corporate governance can be measured in an organization i.e. (board size, board
composition, CEO status, audit committee).
4. Participants
in the Corporate Governance Structure: They are the various
groups which has stake in the company i.e. (Board of Dir3ector, Shareholders,
Stakeholders, etc).
5. Corporate
Codes: These are institutional arrangements and regulatory
authority providing the best practices for companies in Nigeria.
6. OECD:
The
Organization for Economic Cooperation and Development.
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