IMPACT OF CORPORATE GOVERNANCE ON ORGANIZATIONAL PERFORMANCE

CHAPETR ONE

INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

 

Abstract

This study is on impact of corporate governance on organizational performance. The total population for the study is 200 staff of selected banks in Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, accountants, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 

 

 

 

 

 

 

 

 CHAPTER ONE

INTRODUCTION

• Background of the study

Corporate governance has in recent years become a topical issue both in business and academic circles. The concern in business arose out of the perceived importance that a tradition should be developed that supports moral and ethical conduct in business affairs which will create a general climate (both legal and social environment) that will promote good governance of firms. In the academic world, it is established that business decisions are not made in a vacuum. Business decision makers have objectives outside the firms’ objectives, for example managers are interested in their own personal satisfaction, in their employees’ welfare, as well as in the good of the community (society) at large and these objectives impact on shareholders wealth adversely (Akeem, 2014). The genesis of Corporate Governance lies in business scams and failures. The Watergate scandal, the junk bond fiasco in USA and the failure of Maxwell, BCCI and Polypeck in UK resulted into setting up of the Treadway committee in USA and the Cadbury committee in UK on corporate governance. The guiding principle of good corporate governance is “transparency and ethics” should govern corporate world. Increasing strategic importance of professional management probably constitutes the most important aspect of changing profile of corporate governance. Given the global challenges, the only choice left with business and economic enterprises is to follow the corporate governance practices – the path for living, working, surviving, successing and the excelling in the future (Bansal and Bansal, 2014). Directors without corporate enforcement mechanism may paint misleading pictures of financial performance of their organisations to lure unsuspecting investors. However, the effect of these actions on some corporations is devastating. There is the collapse of the energy corporation Enron in 2001 in US, WorldCom, Global Crossing, and Rank Xerox, most of which filed for bankruptcy after adjusting their accounts. Between 2002 and 2005, several international corporations failed, including Mutual Risk Management Ltd, Equitable Life Assurance Society UK collapsed in year 2000 because directors of the companies unlawfully used money met for guaranteed annuity rate policies to subsidize current annuity rate policies. Lion of Africa Insurance in Nigeria also liquidated because of board crisis it liabilities outweighed the assets and could not recapitalize in 2007 (Momoh and Ukpong, 2013). The increasing incidence of corporate fraud relating to exaggerated and overstated accounts have informed renewed global emphasis on the need for good corporate governance. According to Nwachukwu (2007), there is a growing consensus that good corporate governance has a positive link to national economic growth and development. Checks and balances in an organization are strengthened through good corporate governance. By definition, corporate governance is a system or an arrangement that comprises of a wide range of practices (accounting standards, rules concerning financial disclosure, executive compensation, size and composition of corporate boards) and institutions (legal, economic and social) that protect the interest of corporation’s owners. Furthermore, adherence to good corporate governance is inevitable especially in the Nigerian business climate considering the critical multiplier effects a failed corporate entity would cause to investment decision, unemployment rate and economic growth. Thus, the practice of a good corporate governance system helps to provide a degree of confidence that is necessary for the proper functioning of the market economy and hence organisatiomal performance (Momoh and Ukpong, 2013). To this end, there is also a widely held view that better corporate governance is associated with better firms’ performance, but the evidence is not sufficiently available in the Nigeria context. As such, providing an additional empirical evidence of the impact of good corporate governance on organizational performance is urgently needed

 

• STATEMENT OF THE PROBLEM

Incorporation may mean that the owners of the organization are not necessarily the managers and this may create agency issues which include managers acting for their own selfish interest at the expense of other stakeholders. Despite tight regulatory framework corporate governance continues to weaken in Nigeria (Momoh and Ukpong, 2013). Many companies have been characterized by scandals. Directors have acted illegally or in bad faith towards their shareholders. Corporate governance which is hitherto seen as the foundation for good corporate performance has received lack-luster attention from corporate bodies globally for a considerable length of time. This attitude which bordered on neglect of corporate strategies may have eventually led to the recent global high profile corporate failures. Notable among such failed corporate bodies are HIH Insurance and One-Tel both in Australia, Maxwell Communications Corporation, and Bank of Credit and Commerce International (BCCI) both in the United Kingdom; Enron and Worldcom both in the United States and Parmalat in Italy. All these failures have been attributed to poor corporate governance (Tennyson, 2010). In Nigeria, the story is not different. There has been several corporate failures and large-scale misappropriation of funds in the recent past in Nigeria, involving both public and private organizations such as AVOP Oil, Anambra State Motor Manufacturing Company, African Petroleum Nigeria Limited, and many others. The consequences of institutional failure (considering the multiplier effect of financial institutional failure on the real sector of the economy) are unacceptably costly to a developing country like Nigeria. This affects the level of confidence the public has in various corporate establishments. The consequences of ineffective governance systems leading to corporate failure will not only affect the shareholders but also, the employees, suppliers, consumers and the nation as a whole. Thus, a good governance system that will promote ethical value, professionalism and transparent application of best practices is desirable.

1.3   OBJECTIVES OF THE STUDY

The major objective of the study is to examine the impact of good corporate governance on organizational performance. Other specific objectives are as follows:

1. To explore the relationship between corporate governance and organizational performance.
2. To find out the impact of corporate fraud on organizational survivability

iii.        To investigate the effect of corporate dividend policy  on shareholders’ interest

1. To identify the role of Corporate Regulatory Agencies in ensuring transparency and ethics in the Nigerian banking industry.

 

• RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H₀:  There is no significant relationship between corporate governance and organizational performance

H₁: There is significant relationship between corporate governance and organizational performance

H₀²: Corporate fraud is not a significant predictor of organizational survivability

H₂: Corporate fraud is a significant predictor of organizational survivability

• SIGNIFICANCE OF THE STUDY

This study will give a clear insight on impact of corporate governance on organizational performance. It will be beneficial to students, organization and the general public. The study will serve as a reference to other researchers that will embark.

• SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers impact of corporate governance on organizational performance. The researcher encounters some constrain which limited the scope of the study;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

 

• DEFINITION OF TERMS

CORPORATE GOVERNANCE: Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community

ORGANIZATIONAL PERFORMANCE: Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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