Corporate governance in Africa

In general, the 1990s was a decade of considerable and broad economic growth. It was also characterised by extensive corporate (financial) sector failure in South‐East Asia. Since 2001 a number of major (non‐financial) corporations have failed in the USA and Europe. The majority of these failures have been attributed to an absence or dereliction of efficient disclosure and corporate governance. Africa has yet to witness the level of corporate failure experienced elsewhere, but it should be able to learn some lessons and perhaps leapfrog some of these experiences. This will only be possible, however, if disclosure and corporate governance in Africa is carefully analysed, and implemented in the context of appropriate institutions. This paper carries out an assessment of the state of play of corporate governance in Africa. An extensive literature search of academic, policy and private sector documentation on corporate governance in Africa shows that there has been little or no academic research and that there are also very few public policy documents on corporate governance in Africa. In some of the larger economies of Africa, however, a number of private sector initiatives on corporate governance have begun to emerge. Accordingly, mindful of the fact that improvement in corporate governance in Africa has to be placed in the context of the level of economic development, specific corporate governance issues and challenges are discussed. The paper concludes by identifying future research needs on corporate governance in Africa.

Contents: Acknowledgements Introduction Jeremy Moon, Marc Orlitzky and Glen Whelan PART I THE EMERGENCE OF ETHICAL CORPORATE GOVERNANCE CONCERNS 1. J. Maurice Clark (1916), 'The Changing Basis of Economic Responsibility' 2. E. Merrick Dodd, Jr. (1932), 'For Whom are Corporate Managers Trustees?' 3. A.A. Berle, Jr., (1932), 'For Whom Corporate Managers Are Trustees: A Note' 4. Joseph L. Weiner (1964), 'The Berle-Dodd Dialogue on the Concept of the Corporation' PART II THE MANAGERIAL REVOLUTION 5. Adolf A. Berle (1965), 'The Impact of the Corporation on Classical Economic Theory' 6. Eugene F. Fama and Michael C. Jensen (1983), 'Separation of Ownership and Control' 7. James H. Davis, F. David Schoorman and Lex Donaldson (1997), 'Toward a Stewardship Theory of Management' PART III SHAREHOLDERS, STAKEHOLDERS AND MANAGERIAL DUTIES 8. William M. Evan and R. Edward Freeman (1988), 'A Stakeholder Theory of the Modern Corporation: Kantian Capitalism' 9. John Hendry (2001), 'Missing the Target: Normative Stakeholder Theory and the Corporate Governance Debate' 10. Ian Maitland (2001), 'Distributive Justice in Firms: Do the Rules of Corporate Governance Matter?' 11. Alexei M. Marcoux (2003), 'A Fiduciary Argument Against Stakeholder Theory' 12. Richard Marens and Andrew Wicks (1999), 'Getting Real: Stakeholder Theory, Managerial Practice, and the General Irrelevance of Fiduciary Duties Owed to Shareholders' 13. David Lea (2004), 'The Imperfect Nature of Corporate Responsibilities to Stakeholders' PART IV COMPARATIVE AND GLOBAL PERSPECTIVES 14. Ruth V. Aguilera and Gregory Jackson (2003), 'The Cross-National Diversity of Corporate Governance: Dimensions and Determinants' 15. Lori Verstegen Ryan (2005), 'Corporate Governance and Business Ethics in North America: The State of the Art' 16. Josef Wieland (2005), 'Corporate Governance, Values Management, and Standards: A European Perspective' 17. Martin Rhodes and Bastiaan van Apeldoorn (1998), 'Capital Unbound? The Transformation of European Corporate Governance' 18. David Kimber and Phillip Lipton (2005), 'Corporate Governance and Business Ethics in the Asia-Pacific Region' 19. G.J. Rossouw (2005), 'Business Ethics and Corporate Governance in Africa' 20. Mauro F. Guillen and Mary A. O'Sullivan (2004), 'The Changing International Corporate Governance Landscape' PART V ALTERNATIVE PERSPECTIVES AND NEW DIRECTIONS 21. Gerald F. Davis (2005), 'New Directions in Corporate Governance' 22. Matthias Benz and Bruno S. Frey (2007), 'Corporate Governance: What Can We Learn from Public Governance?' 23. Thomas Clarke (2007), 'The Materiality of Sustainability: Corporate Social and Environmental Responsibility as Instruments of Strategic Change?' 24. John Roberts (2001), 'Corporate Governance and the Ethics of Narcissus' 25. Amiram Gill (2008), 'Corporate Governance as Social Responsibility: A Research Agenda' 26. David Antony Detomasi (2007), 'The Multinational Corporation and Global Governance: Modelling Global Public Policy Networks' Name Index

Despite growing research on corporate governance and financial misconduct in Africa, most studies remain fragmented, focusing on specific countries or isolated mechanisms. This underscores the need for a comprehensive synthesis to develop a holistic framework addressing earnings manipulation across the continent’s diverse contexts to advance sustainable financial governance. To fill this gap, this study systematically reviews 45 articles using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology (Moher et al., 2009) to identify factors that strengthen governance’s role in mitigating earnings manipulation throughout Africa. The findings reveal notable regional variations. Studies from North Africa suggest governance effectiveness depends on ownership structures (family, state, or managerial) and institutional reforms. Research in West Africa indicates risk management committees and board financial expertise are important, though political interference may reduce their impact. East African studies find gender diversity and institutional ownership beneficial, despite some paradoxical results on board independence. Studies on South Africa highlight that a strong regulatory environment, audit quality, and ethical leadership can enhance internal controls. Finally, research from Central Africa points to auditor specialization and board mandate stability as key factors in limiting earnings management. Overall, these findings suggest that governance reforms tailored to regional contexts are essential to effectively reduce earnings manipulation and promote sustainable financial governance across Africa.

This article examines corporate governance in Africa and its significance for corporate repurposing. It relies on the framework of the Organisation for the Harmonisation of Business Law in Africa (OHADA), which unites seventeen African states under one corporate law jurisdiction while exploring how the interpretation and practice of this legal system can be integrated with or influenced by national sectoral laws and cultural norms. The workings of these different legal sources denote the case for heterodox pluralism of corporate purpose, whereby corporate membership is not tethered to shareholding only, but the workforce and neighbouring too and corporate legitimacy is not merely a function of legal arrangements but equally derives from broader society. The governance of corporations in Africa must correspond to such imperatives to ensure that the prevailing shareholder primacy norm does not continue its unencumbered de facto reign and reduce African stakeholderism to comparative impotence and mere scholarly exercise.

In recent years there has been a surge in corporate governance reform around the world. On the African continent this phenomenon is evident in the number of national corporate governance reports that have been produced. This article analyzes these national codes of corporate governance in Africa to determine how the relationship between corporate governance and business ethics is being perceived. The article commences by providing a background to the corporate governance reform process that still is in the making in Africa. It then explores the relation between corporate governance and business ethics by looking at various aspects of corporate governance that might have an impact on how business ethics is being perceived and practiced. Finally new corporate governance developments that potentially might have an impact on the prominence and practice of business ethics are reviewed.

This text provides an original opportunity to identify and assess implementation and ethical issues relating to corporate governance in Africa. Through specific case studies regarding corporate governance in individual African states and relationships with generic determinants, advice and direction from the international community, this text provides an ethical assessment of issues regarding globalization as an imposition and the necessity of developing countries to adhere to external governance mechanisms. In addition, through the case studies the text will illustrate what may be considered necessary transformations within specific states if governance procedures are to be transparent and ethical so as to facilitate trust, confidence and inward investment. There is recognition that corporate governance contributes to sustainable economic success as well as enhanced credibility and corporate responsibility (Armstrong 2003); each a necessary variable when attracting funding from both regional and foreign investors. ‘Good’ corporate governance practices are also perceived as means of deterring unethical and corrupt practices which may undermine African capability and credibility in the international domain. ‘Good’ corporate governance may also ensure market discipline and transparency (Armstrong 2003). Indeed, ‘standardization of corporate governance … across many different countries may … seem like a sound approach’ (Letza 2015, p. 191). However, because of cultural and historical differences such an approach has largely been resisted. That said, it is not unusual for developing and ‘transition economies to adopt with little modification the established codes and regulations of developed countries’ (ibid). Indeed, local cultures and traditions exist in individual countries and this text identifies relationships between universal and relativist perspectives of corporate governance in Africa. In addition, rationales for acting through self-interest (egoism) and/or the common interest (altruism) underpin the ways agents behave when dealing with moral dilemmas and regulation.

The rising tide of corporate governance around the globe left its traces on the African continent. Despite the diversity amongst the 53 countries with their varied colonial legacies comprising Africa, some patterns can be discerned with regard to corporate governance. The purpose of this chapter is to identify general trends in how corporate governance is being institutionalized in Africa, and more specifically, to indicate the implications thereof for the prominence and practice of business ethics in African corporations. The most prominent models of corporate governance in Africa are first identified and the implications thereof for business ethics discussed. This discussion touches on stakeholder identification and engagement, the role of business ethics within these corporate governance models, as well as the way in which the ethical performance of corporations are governed in terms of these models. Finally some new corporate governance developments on the African continent are reviewed in order to gauge their possible impact on the prominence and practice of business ethics. Before attending to this agenda, a brief overview of the African landscape is provided to contextualize the ensuing discussion.KeywordsBusiness EthicCorporate GovernanceSocial Responsibility InvestmentGood GovernanceStakeholder EngagementThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Editorial – Toward a Global Theory of Corporate Governance

It is generally believed that poor corporate governance has been the Achilles’ heel of many corporations in both rich and poor nations. This is particularly true of Nigeria, where corruption is endemic. However, following the change of government in 1999, the Federal Government is keen to attract foreign investments into the country. Given the high correlation between corporate governance and investor decisions, the government is keen to position the country to take advantage of the opportunities in the global market by adhering to principles of good governance. Yet not much is known about the state of, or the current framework for, corporate governance in Nigeria. By providing a comprehensive review of the state of corporate governance in Africa’s most populous country, this paper makes a contribution to the literature on the state of corporate governance in developing countries. The paper examines the mechanism for corporate governance, including the requirements of the recently established Code of Best Practices for Public Companies in Nigeria. In particular, it examines the roles of the government, the Corporate Affairs Commission, the Securities and Exchange Commission, the Nigerian Stock Exchange, the representatives of the shareholders of the companies, directors, auditors and the Audit Committee in the governance process. The paper addresses the issue of whether the governance mechanisms in Nigeria are adequate in the face of the changes and challenges in the global corporate scene. It argues that whilst there is a case for adherence to global corporate governance standards, any Code of Best Practices adopted in Nigeria must reflect its peculiar socio‐political and economic environment, whilst at the same time providing the right assurance to prospective and existing shareholders.

Foreign Bank Assets and Presence on Banking Stability in Africa: Does Strong and Weak Corporate Governance Systems under different Regulatory Regimes Matter?

COVID-19 has affected almost all spheres of life. Many researchers focus on the impact of this pandemic on economic, social and political spheres neglecting its effects on the pillars of corporate governance. This paper explores the impacts of COVID-19 on corporate governance in Africa. This paper consulted a number of secondary sources in order to fill the inadequacy in academic gap on COVID-19 and corporate governance. This paper established that COVID-19 has adversely affected the corporate governance practices; cancellation and postponement of important meetings. Companies are advised to adopt alternative digital communication platforms to convey important information to stakeholders.

Strengthening Domestic Corporate Activity in Global Capital Markets: A Canadian Perspective on South Africa's Corporate Governance

Shareholder activism has become a force for good in the extant corporate governance literature. In this article, we present a case study of Nigeria to show how shareholder activism, as a corporate governance mechanism, can constitute a space for unhealthy politics and turbulent politicking, which is a reflection of the country’s brand of politics. As a result, we point out some translational challenges, and suggest more caution, in the diffusion of corporate governance practices across different institutional environments. We contribute to the literature on corporate governance in Africa, whilst creating an understanding of the political embeddedness of shareholder activism in different institutional contexts—i.e. a step closer to a political theorising of shareholder activism.

Investors around the world place emphasis on good corporate governance. This makes it imperative for the integration of good governance into corporate governance for sustainable development in Africa. There is a high mix of business with state politics in most African countries, whereby ownership is in most cases concentrated around top political elites. As a result, other stakeholders and minority shareholders often lack adequate institutional and legal protection, while managers are unable to fully exercise their mandate or do not bear the full costs of their actions. Also, even though corporations adopt international accounting standards, they hardly put them into practice breeding managerial deficiencies and abuse of discretion pervasive on the continent. Interpretivist or constructivist approach informed this study through a desktop research. An interrogation of the corporate governance principles in the public sector of selected countries in West Africa and Southern Africa was performed as prompted by the results of the various indices. Results reveal that ‘excessive’ political decisions are handed down to public officials as directives from political bigwigs. Good corporate governance must play a role in aligning the interests of politicians, bureaucrats and the electorate. An implementation framework is developed and recommended for sustainable development as the task ahead.

PurposeThe overall objective of the study was to track, over a two‐year period, the reported incidences of corporate governance transgressions at five strategic South African state‐owned enterprises (SOEs).Design/methodology/approachTransgressions for each SOE were documented against the Organisation for Economic Co‐operation and Development's framework of best practice in governance for SOEs by reviewing annual reports and newspaper article citations over a two‐year period.FindingsWhile political intervention in the operational running of each SOE is apparent, government appears not to have fulfilled its oversight role of ensuring the sound governance of SOEs according to best practices. While the SOEs appear to comply with external governance demands, compliance to internal, self‐regulated governance appears to be lacking.Research limitations/implicationsThe use of annual reports and media reports to document governance practices are open to subjectivity. The broader extrapolation of findings based on five SOEs must be undertaken with caution.Practical implicationsThe present study alerts government to potential areas of corporate governance practices at South African SOEs that warrant attention. As South Africa has recently joined the BRICS bloc of developing countries, the findings from the present study could afford a starting point for future comparative study among this group of countries, which appears to evidence similar challenges with regard to governance within their SOEs.Originality/valueThe present study begins to elevate the debate on corporate governance at South African SOEs from public rhetoric to a deeper understanding of the nature of the major problems that warrant attention. Although limited in scope, the study contributes to the scarce academic literature on public sector corporate governance in Africa in general, and in the South African SOE sector in particular.