Effects of Internal Control Mechanism on Corporate Governance: Evidence from Alternative Security Market in Nigeria

Abstract

The focus of this study was to examine the effects of internal control mechanisms on corporate governance; evidence from alternative security market in Nigeria. Survey research design was employed, primary data were obtained from a structured questionnaire administered. One Hundred and Twenty- Four (124) respondents who were members of staff including the owners in the Alternative Security Markets known as quoted Small and Medium Enterprises, from which only Ninety – Two questionnaires were found usable. Responses were sought to two research questions, in relation to which two hypotheses were formulated and tested at 5% level of significance. The data collected were presented and analyzed using pie-chart, standard deviation, Levene Test of homogeneity of variance and ordinary least square method of regression analysis. Findings from the analyses revealed that with strong evidence that internal control systems have significant effect on board responsibility of quoted SMEs in Nigeria (t= 1.412, p <0.05) and that internal control systems have a strong response to board transparency of quoted SMEs too. (t= 1.672, p <0.05). It was in the light of the foregoing findings that the study concluded that internal control systems have significant effect on corporate governance of quoted SMEs in Nigeria. F=141.532, p-value =0.000). The study recommended that both quoted and unquoted small and medium enterprises should improve their internal control system, as doing this would further improve board responsibilities, and board transparencies.