Comparative Analysis of the Concept of Corporate Governance in Nigeria and the United States of America (USA)

Abstract

Corporate Governance is a recent global development that has attracted the attention of corporate investors, researchers, and governments. It arose out of the need to address sudden collapses and failures of big businesses and corporate bodies in every angle of today’s world. In the last decade, there has been increased focus worldwide on corporate governance in terms of structure, processes, systems, and practices which drive the conduct of business. This is in recognition of the critical role of corporate governance in the success or otherwise of companies. The need for renewed corporate governance in Nigeria arose out of the realization that corporate governance has not been given adequate attention it deserves in most developing countries. For instance, it is on record that many of the thirty-four Nigerian banks that had their operating license revoked between the late ‘80s and early ‘90s suffered from poor corporate governance. The United States of America (USA) is arguably the biggest economy of the world. It is argued that it produces twenty-one percent (21%) of the total world output through millions of business firms operating in its territory. It is generally assumed that US human capital is more productive and business firms are more efficient. Thus, the US firms have been obtaining efficiency gains vis-a-vis their European and Asian competitors. This is often attributed to good corporate governance. This study seeks to examine the level of corporate governance in Nigeria and the United States of America. The work will compare both systems in order to identify areas of difference and similarities and establish how they can be of benefit to stakeholders in both countries with a view to identifying factors that led to the collapse of businesses and corporations on account of the inapplicable methodology of Corporate Governance. Different scholars and researchers have used both qualitative and quantitative methods in analyzing corporate governance in Nigeria. Quantitative methods are usually used in assessing the effectiveness of corporate governance on different variables such as productivity and profitability. Qualitative methods on the other hand are used to assess the effectiveness of corporate governance in preventing future collapses by analyzing previous collapses. This study shall thus make use of the Qualitative Method. This study will be evaluating the corporate governance codes and its effectiveness in preventing future corporate collapses and scandals in Nigeria. It would compare the Nigerian corporate governance code to that of the United States as a measure of its standard and effectiveness.