Nigerian Corporate Governance Research Articles

Building The Nigerian Corporate Governance Index (NCGI) and Intellectual Capital Disclosure Practices

Building The Nigerian Corporate Governance Index (NCGI) and Intellectual Capital Disclosure Practices

AN EVALUATION OF CORPORATE GOVERNANCE CODE AND SMALL AND MEDIUM ENTERPRISES IN NIGERIA

The paper evaluated Nigerian corporate governance code to identify the need for an adoption of a separate corporate governance code for SMEs as identified in Dubai and United Kingdom. Corporate governance code essentially is set out help corporate organizations in addressing ownership and control to ensure sustainability of their system into foreseeable future. This code requires a special attention for business continuity among SMEs in Nigeria. The study adopted secondary data approach by reviewing the corporate governance for Nigeria, corporate governance code for SMEs in Dubai and some other relevant literature. The findings revealed that Nigeria and some West African countries have no separate corporate governance code that guides their SMEs for growth and sustainability. The number of failed SMEs should encourage regulators to set up an identifiable corporate governance code for this group. The study recommended that Nigeria should take a cue from Dubai by organizing a separate forum to sensitize SMEs on the need to adopt corporate governance code for the expansion of their business, access to credit, opportunity for foreign technical partnership and foreign investment, the regulators should device a monitoring system that checks the failure rate among the SMEs and provide training to family business owners on the need to embrace corporate governance code.

The Fallacy Of The Rational Apathy Theory: Minority Shareholder Electronic Participation In Nigerian Corporate Governance

Purpose: The appeal of the Rational Apathy Theory lies in the fact that it is not only a descriptive theory of shareholder behaviour in the modern public firm but also a powerful normative tool which recommends itself to corporate legislators and policymakers. True to their normative logic, proponents of apathy contend that since shareholders of modern public firms will never find it cost-efficient or incentivized to perform their monitoring responsibilities over corporate management, insisting on a shareholder-oriented corporate governance model is undesirable. This article rejects the determinism and immutability of the above thesis and argues that firm investors will embrace activism where the cost of corporate monitoring is reduced, and the benefits of doing so are increased. Given the ability of the internet to reduce monitoring costs for shareholders (predominantly minority shareholders) in public companies, the article campaigns for minority shareholder electronic participation in corporate governance and proposes a careful reform of corporate law and governance in post-covid Nigeria, drawing inspiration from similar reforms on electronic governance in Canada, UK, and the State of Delaware in the US. In a society where digitalization has been identified as a major catalyst for the economic revival of commercial and corporate life, this article recommends itself to policy and lawmakers, corporate boards, corporate law experts, legislators, regulators, and other relevant stakeholders. Methodology: The article adopts doctrinal and comparative methods of legal analysis. Results/Findings: The article finds that while the Rational Apathy Theory may have served the analogue world, it is unsuitable for a digital generation, where issues of cost, communication and participation could be liberalized, through the use of the internet, to serve the interest of shareholder democracy in public companies.

The Fallacy of the Rational Apathy Theory: Minority Shareholder Electronic Participation in Nigerian Corporate Governance

The Fallacy of the Rational Apathy Theory: Minority Shareholder Electronic Participation in Nigerian Corporate Governance

Ethnicity and Corporate Boards: Evidence from a Developing Economy

The literature on corporate governance and institutional theory suggests that corporate governance responds to a broad array of institutional influences. In extending this literature, we adopt the Nigerian multi-ethnic institutional setting to understand how ethnicity influences boards and corporate governance. Employing an interpretivist qualitative methodology that includes 21 semi-structured interviews with two key stakeholder groups, i.e., board directors and regulators, we find the prevalence of a board ethnicity logic in the Nigerian corporate governance system. We uncover the drivers of this logic to include ethnocentric inclinations, government policy, colonialism, and the informal business environment. Furthermore, we show why and how this ethnicity logic conflicts with the legal system/regulatory framework. This research also allows us to examine the effects of the ethnicity logic on boards and corporate governance mechanisms such as whistleblowing.

Corporate Governance Research in Nigeria: A Review

This paper is a literature review of the recent corporate governance research in Nigeria. It identifies the recent advances and challenges in the literature and suggest some directions for future research. A comprehensive review of the recent corporate governance literature is important because it provides a basis to compare the corporate governance experience in Nigeria with the corporate governance experience in other African countries and developing countries. The findings from the literature review reveal that the board of directors is the most explored corporate governance determinant in the Nigerian corporate governance literature. Most studies focus on some corporate governance determinants, and ignore other corporate governance determinants in firms. There is some consensus that corporate governance failure in Nigeria is caused by multiplicity of factors such as lack of political will by the government to enforce corporate governance laws, deliberate refusal to comply with existing corporate governance laws by politically connected firms, weak compliance by firms, weak enforcement by regulators, and conflicting codes in the country’s corporate governance codes. Also, recent corporate governance studies do not systematically build on previous corporate governance studies. Regarding methodology, most Nigerian corporate governance studies are merely experimenting different methods of analyses without advancing the literature in a significant way. The study also finds that the 2018 Nigerian code of corporate governance (NCCG) solves some problems and create new problems for Nigerian firms.

Corporate governance and auditors’ expectation

This study investigated the impact of Code of Corporate governance on the auditor’s expectation gap, following the implementation of the Nigerian corporate governance code. The study outcomes were based on the literature review, the analysis of the qualitative data and discussions of generated themes. The results revealed that adopting effective corporate governance (accountability) system positively contributes in narrowing the audit expectation gap due to the increasing interest in the role of accountability in fighting corruption in Nigeria. The Study recommends; the need for continued sensitization of the public, by both the auditing profession and other stake holders on the role and duties of the auditor, management and the board to avoid expectation gap from the public. The CBN, NAICOM, PENCOM and NCC should implement and enforce the approved Code of Governance. Keywords: Audit Expectation Gap, Corporate Accountability, Audit committees, Code of Corporate Governance, Regulatory agencies.

Corporate governance research in Nigeria: a review

This paper analyzes the state of corporate governance (CG) research in Nigeria. It consolidates the literature to identify the current state of CG research in Nigeria and to identity opportunities for future research in the literature. Among other things, the review show that the Board of directors (BOD) is the most explored corporate governance mechanism in the Nigerian corporate governance literature. Secondly, most studies focus on some governance mechanisms but ignore other governance mechanisms in firms. Thirdly, there is some consensus that the corporate governance failures in Nigeria is caused by multiplicity of factors mainly, lack of political will by the government to enforce corporate governance laws, deliberate refusal to comply with existing CG laws by politically connected firms, weak compliance by firms, weak enforcement by regulators, and conflicting codes in the country’s corporate governance codes. Also, the review shows that current CG studies do not systematically build on previous Nigerian CG studies which indicates a lack of direction in the Nigerian corporate governance literature. Regarding methodology, the findings reveal that most Nigerian CG studies are merely experimenting different methods of analysis without necessarily advancing the literature in a significant way. These findings have implications.

Neoliberal corporate governance mechanisms

PurposeThis paper aims to identify and analyze the neoliberal, Anglo-American corporate governance mechanisms which embed shareholder value in Nigeria, and assess how they constitute major “practical barriers” to effective corporate social responsibility (CSR) in the country. While some of these mechanisms operate internally – performance-related pay (executive remuneration) – the use of non-executive directors – others operate externally – the markets for corporate control and the stock markets.Design/methodology/approachThe paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the nature of these mechanisms and argues that their operations amount to “practical barriers” to effective CSR in the country.FindingsThe paper finds that the existence of these mechanisms incentivizes corporate managers to maximize shareholder value and raise the share price of corporations as high as possible. It also leads to the financialization of corporate governance, rent seeking and the pursuit of short-term profits by corporations. In this context, within the Nigerian corporate governance framework, the existence and operations of these mechanisms amount to “practical barriers” to effective CSR.Originality/valueThe paper offers a fresh insight into the existence and operations of the neoliberal corporate governance mechanisms which embed shareholder value. By critically assessing the operations of these mechanisms in the Nigerian situation, it extends the body of knowledge in this area by showing how they amount to practical barriers to effective CSR in the country.

Promoting a more efficient corporate governance in Nigeria through the law

Corporate governance reforms have been viewed as one of the formal means of improving the economic and social welfare of emerging economies. There have been efforts by the Nigerian government, through its agencies, to promulgate codes of best practices for companies in the country. These reforms appear to be ineffective and the codes do not compliment and are not complimented by corporate law. The aim of this paper is to identify the problems that hinder effective corporate governance reforms in Nigeria within corporate law. Using the doctrinal approach, the paper analyses features of the Nigerian corporate governance framework and identifies the problems bedeviling this regime. It argues that the problems stem from (amongst others), state ownership and control, board independence, poor minority shareholder protection, ineffective judicial system and Incomplete disclosure. The paper, by linking the apparent weakness of the extant framework to the attempt to reform outside corporate law, suggests a hybrid of legislation including hard laws, soft laws and other policy proposals to promote an effective corporate governance regime in Nigeria.

Preface to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance

Preface to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance

Corporate Governance Disclosure: The Evidence from Nigeria

This study centres on the investigation of the level of compliance with the Nigerian Corporate Governance Code's recommendations by the six selected oil companies from 2004 to 2012. Two stages of compliance level with the Corporate Governance Disclosure Index (CGDI) were developed from 43 specific corporate governance issues based on the Nigerian Code's provisions and analysed. Firstly, the study demonstrates the degree of compliance with the CGDI for the selected companies over the survey period (2004-2012). This allows the testing of the continuous progress of the level of conformity with the Nigerian Code's provisions. Second, it measures the level of compliance with the CGDI that existed over the 2004-2009 and 2010-2012 periods respectively. The motive is to find out whether the level of compliance with corporate governance has increased over the two periods since the creation of the Nigerian Code in late 2003. The findings indicate a remarkable improvement with the compliance with the Nigerian Code over the periods by the selected companies.

English

The rise of accounting scandals has prompted the need to improve the relevance of financial reporting by setting up good corporate governance structures. The relationship between corporate governance and fraudulent activities has been strongly debated in the developed countries. It is recently that attention has turned to the study of corporate governance and financial reporting in developing countries. This paper examines and investigates the effects of corporate governance codes in curbing fraudulent activities in private organisations in Nigeria. This means that this paper is comparing two codes, the one of 2011 and the newer one of 2016. Specifically, this piece of work focuses on the characteristics of boards of directors and audit committees of 20 private companies listed on the Nigerian Stock Exchange during the period 2011-2016, by analysing whether the independent directors on boards and audit committees are associated with reduced levels of fraudulent activities. The objective of this study is to: 1) Ascertain whether a higher number of independent directors on boards of directors are associated with less fraudulent activities. 2) Investigate whether audit committees comprising independent directors are associated with less fraudulent activities. The study gathered data from the companies on the Nigerian stock exchange and the fraudulent activities variable, which is used to refer to either financial fraud or manipulated earnings was measured by discretionary accruals according to Dechow et al. (1995). The financial statements of the companies were used to determine discretionary accruals and the corporate governance variable data were obtained from the company’s corporate governance information as presented in their annual reports. The results supported the null hypotheses:1) Companies with higher number of independent directors on boards are associated with less fraudulent activities. 2) Companies with audit committees comprising independent directors are associated with less fraudulent activities. Therefore, the study adds to the limited research of the relationship between corporate governance mechanisms and fraudulent activities in Nigeria. It has also provided empirical evidence on the importance of some of the regulatory requirements established by the Nigerian Corporate Governance Codes.         Key words:       Corporate governance, financial fraud, manipulated earnings, board of directors, independent directors, audit committee.

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

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.

The Status and Role of an Alternate Director Under the Nigerian Corporate Governance: A Critical Review

The abuse of the role and status of an Alternate Director and its stultifying effects on the Corporate Governance practices in Nigeria forms the bedrock of this work. An alternate director in Nigeria is no more than a director created pursuant to the Memorandum and Articles of Association (the MeMart) of a Limited Liability Company. The provisions of the Companies and Allied Matters Act (the CAMA), cap C20, LFN, 2004 on an alternate director is copiously missing. The Companies Regulation 2012, made pursuant to S.16, 585 and 609 of the CAMA, LFN 2004 also makes no reference to alternate directorship. An alternate director by law and regulations are not permitted to execute statutory forms of the Corporate Affairs Commission (CAC) since they are not recognized by the CAC. For instance, FORM CAC 7A (Notice of Change of Directors or in the name, residential address or postal address of director) makes no provision for the position of an alternate director. We doubt therefore if an alternate director can execute a form CAC 7A or any other statutory or official documents without being queried by the statutory body. This is indeed a limitation to the performance of his role(s) as an alternate. The paper therefore seeks to evaluate the scope of his roles and status as a director within the practice of its usage in our corporate governance. In discussing this further, we will attempt to reflect a multi-jurisdiction view of its art and practice.

Banking Reforms: The Nigerian Corporate Governance Perspective and New Challenges

Banking and corporate governance reform is an ongoing phenomenon which has received intense global attention after the 2008 global financial crisis. This is particularly true of Nigeria where banks constitute a dominant position of the financial sector. It has compelled many financial and non-financial regulators in Nigeria such as the Central Bank of Nigeria and the Securities and Exchange Commission to revise the codes of best practices for banks and other public companies overtime with a new single code of corporate governance [the national code of corporate governance] set to be released by the Financial Reporting Council of Nigeria.This paper makes a contribution to the existing literature on the state of corporate governance development in the Nigerian banking and non-banking sector, the impacts of the banking regulations and the efforts put in place at ensuring that banks are well governed. It also addresses the issue of compliance, disclosure and harmonisation of codes in Nigeria. It argues that while standards and codes are being enacted and revised by the CBN, the SEC and now FRCN, there is greater need for the Nigerian internal and external environments (such as the socio-political, economic and cultural systems) to support the reforms. There is also need for better enforcement, a renewed transparency and total compliance to the spirit and letter of the code in Nigeria.

Corporate Governance Regulation: The Key Factor to Credible Financial Reporting in Nigeria

The fundamental cause of financial markets meltdown in the global economy is the persistent deterioration of corporate governance regulation that results to poor financial reporting quality. The continuous business failures occasioned by irresponsible corporate governance and low financial reporting quality undoubtedly has triggered a serious threat to the Nigerian economy. The perceived high profile-financial scandals have become a major source of concern, and “galvanized considerable interest in and discussion” on the imperative of “corporate governance in the financial reporting process.” Besides the shareholders prospect being damned, the confidence of other stakeholders is lost on the pages of window-dressed financial reports of the entity. The Sarbanes-Oxley Act of 2002 was passed by the U.S. congress in response to preventing the reoccurrence of financial scandals; “to reinforce corporate accountability and professional responsibilities, and to rebuild investor confidence.”Also to this direction, is the introduction of Code of Corporate Governance for Public Companies in Nigeria by Securities and Exchange Commission (SEC) 2011 and Financial Reporting Council of Nigeria Act of 2011, enacted to harmonize activities of relevant professional and regulatory bodies with regard to ensuring effective corporate governance and credible financial reporting. It is therefore pertinent to guard against the possible causes of sudden corporate failure particularly in Nigeria. While “taking Nigeria’s peculiar institutional configurations into consideration”, aims at critically evaluating the Nigerian corporate governance nature, roles and structure in designing financial information system and to explore how the corporate governance functions can be strategically harnessed to ensuring corporate vitality and prevent manipulations in financial reporting. This paper is purported to “prioritize the long-term health of firms and their shareholders” and to create more long-term stability and profitability within the corporations that are so vital to the health, well-being, and prosperity of the global economy. This study thus, tends to investigate the relationship between corporate governance and financial reporting quality towards restoring the public confidence that can help in creating long term corporate value. The study builds upon legal, regulatory and theoretical framework of corporate governance and financial reporting, analyzing the roles of those charged with governance and how they affect the financial reporting system of the entity. The paper dwells more on corporate governance because it believes that the quality of financial reporting depends largely on the quality of corporate governance of the firm. In the course, four research questions are raised: Does the quality of corporate governance affect the financial reporting quality? Does any relationship exist between corporate governance and audit fees for quality assurance on financial statements? Do the corporate governance codes and regulations matter in ensuring responsible corporate governance and credible financial reporting? Is there any correlation between corporate reputation and quality of financial reporting of the company? Using descriptive and historical study approach, the findings support previous studies which show that financial reporting quality can be strengthened and improved in the face of effective corporate governance. The study also observes that by providing the regulatory documents and ample of governance codes do not connote sound corporate governance and quality financial reporting. This is because corporate governance begins and ends in Boardroom. Also, companies with corporate reputational concern tend to have high drive for good corporate governance which construes in having quality financial reporting. While concludes that a wake-up call for Financial Reporting Council of Nigeria will help to promote credible financial reporting, the paper recommends among others the need to ensure elaborate, comprehensive and simple financial statements content; legislative provision for easy and timely accessibility of financial records to all responsible stakeholders.

Impact of Audit Committee and Audit Quality on Preventing Earnings Management in the Pre- and Post- Nigerian Corporate Governance Code 2011

Earnings management have been considered as one of the methods used by the business leaders to mislead their stakeholders to report unrealistic numbers, despite the various check and balances (e.g. corporate governance code) on the process. Nigeria experienced two corporate governance codes issued by SEC, code 2003 and code 2011. This study tends to measure the effectiveness of these two codes and make comparisons using audit committee and audit quality against earnings management in the pre- and post-code 2011.

Corporate Governance and Disclosure in Nigeria: An Empirical Study

This paper outlines a sample case study of ‘best practice’ as per the Nigerian 2011 code which can be adapted as role ‘model’. Oando PLC, one of the top 30 companies, is identified as the company which had complied with the Nigerian corporate governance code, in reference to transparency and internal control with “Excellent” performance. Similar to European codes, the Nigerian corporate governance codes are voluntary and listed companies are expected to comply with. This study explores the standard and quality of CG practices disclosed by Oando PLC, over the period 2010-2012, using the Nigerian 2011 Code as a benchmark.

An Analysis of the Characteristics and Quality of Corporate Boards of Listed Deposit Collecting Banks in Nigeria

The purpose of this paper is to compare the characteristics of corporate boards of Nigerian banks with the ten largest banks globally in terms of five criteria (board size, number of female board members, number of meetings per annum, age of directors, and duality of Chairman and CEO positions). These criteria have been identified as being relevant for sound corporate governance. The paper also examined whether the Nigerian corporate boards complied with the relevant national Nigerian corporate governance codes. The research methodology consisted of a content analysis of the annual reports of the selected banks. The study found significant differences between the sample of international banks and the Nigerian banks with regards to female board membership, the number of board meetings and the average age of board members. Furthermore, not all banks observed the minimum board governance codes. The regulator should require all banks to follow the Central Bank of Nigeria’s code of corporate governance for banks. DOI: 10.5901/mjss.2014.v5n8p198