THE PRINCIPLES OF GOOD COMPORATE GOVERANCE AND

BEST PRACTICE RECOMMENDATIONS IN NIGERIAN LISTED

COMPANIES: REGULATION, COMMITMENT COMPLIANCE:

(A STUDY OF SELECTED LISTED COMPANIES NIGERIA)

BY

NWAMBA OBUMNEME CHIDOZIE

PG/MBA/07/46574

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

MARCH,2009.

THE PRINCIPLES OF GOOD COMPORATE GOVERANCE AND

BEST PRACTICE RECOMMENDATIONS IN NIGERIAN LISTED

COMPANIES: REGULATION, COMMITMENT COMPLIANCE:

(A STUDY OF SELECTED LISTED COMPANIES NIGERIA)

BY

NWAMBA OBUMNEME CHIDOZIE

PG/MBA/07/46574

A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENT FOR THE AWARD OF MASTERS IN BUSINESS

ADMINISTRATION

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

SUPERVISOR: DR UJF EWURUM

MARCH, 2009.

TITLE PAGE THE PRINCIPLES OF GOOD COMPORATE GOVERANCE AND

BEST PRACTICE RECOMMENDATIONS IN NIGERIAN LISTED

COMPANIES: REGULATION, COMMITMENT COMPLIANCE:

(A STUDY OF SELECTED LISTED COMPANIES NIGERIA)

CERTIFICATION

This is to certify that Nwamba Obumneme Chidozie with

Registration Number PG/MBA/07/46574 is a MBA student of Management;

University of Nigeria Enugu Campus has satisfactorily completed the

requirement for the project research in partial fulfillment for the award of

Masters in Business Administration (MBA) in Management.

The work embodied in the report is original and has not been

submitted in part or full for any other Diploma or degree of this or any other

University.

BY

----------------------------------------------------

NWAMBA OBUMNEME CHIDOZIE

PG/MBA/07/46574

----------------------------------- ----------------------------------

DR. UJF EWURUM MR. C.O CHUKWU

(SUPERVISOR) (HEAD OF DEPARTMENT)

DEDICATION

This work is dedicated to God Almighty.

ACKNOWLEDGEMENT

It is pertinent to accord due respect and appreciate the efforts and kind

gesture of those who possibly enabled this work to come to its end.

In the first place, my unalloyed gratitude goes to my project

supervisor Dr. UJF Ewurum who despite his tight schedule took up a pain

staking task to direct and guide me throughout the time of this work.

I wish to acknowledge the family of Chief and Lolo Offor fro their

frantic support, encouragement both financially and morally.

I remain ever indebted to God Almighty for all His protection and

sustenance to make this programme a hitch free one.

NWAMBA OBUMNEME.C.

PG/MBA/07/46574

ABSTRACT

The necessitated or prompted for the researcher to embark on this study was

a result of an increasing profile of corporate failure, reduce public or

stakeholders confidence, as a result imbalance of interest and other

malfeasance act that are purported in share return, annual statement and/or

unfair dealing that resulted to increase risk to companies. As the topic goes, ‘

the principles of good corporate governance and best practice

recommendations in Nigerian listed companies’ regulation, commitment and

compliance.

However, the objectives of this study revolves round: the corporate

governance practice in term of balancing stakeholder interest, to ascertain

the fairness, transparency and accountability of returns given to shareholders

of the firms. While the methodology adopted was secondary approach where

value added statement are tested in terms of “ annual industrial average,

periodic industrial average” to draw a comparism and the use of percentage

table to test the research questions.

Then, the major finding includes: that among the sectors chosen

banking sector paid least dividend values to its shareholders, that values not

distributed to shareholders were retained for the business development and

the retentions form part of wealth to shareholders or for expansion. Equally,

that the good corporate governance practice practicalized balancing of the

shareholders interest through adequate auditing, proper risk management,

information transparency, proper sense of shared values and accountability,

and well targeted regulated framework by the firms etc.

Again, some of the suggested recommendations surround the

regulatory and supervisory reinforcement of action, increase effort to

recognize the importance of reflecting the specific cultural values and need

for an inclusive approach in order to ensure that companies succeeded in

balancing economic and society’s broader objectives.

Therefore, the incorporation of good corporate governance practice

and best practice recommendations is lever to both corporate and economic

sustainability.

TABLE OF CONTENT Title Page…………………………………………………………………… Certification………………………………………………………………… Dedication………………………………………………………………….. Acknowledgement…………………………………………………………. Abstract……………………………………………………………………... Table of Content……………………………………………………………. Chapter One: INTRODUCTION………………………………………. 1.1 Background of the Study………………………………………………..

1.2 Statement of Problem……………………………………………………

1.3 Objectives of the Study………………………………………………….

1.4 Research Question………………………………………………………

1.5 Significance of the Study……………………………………………….

1.6 Scope of the Study……………………………………………………..

1.7 Limitations of the Study………………………………………………..

1.8 Definition of Related Terms……………………………………………

References…………………………………………………………….. Chapter Two; REVIEW OF RELATED LITERATURE………… 2.1 Brief Thematic History of Corporate Governance………………… 2.2 Corporate Governance in the Public Sector: The Role of Risk

Management…………………………………………………………….. 2.3 Corporate Governance Standard and Control Mechanism in Compliance…………………………………………………………….. 2.4 Challenges and Codes of Best Practices Corporate on Corporate Governance……………………………………………………………. 2.4.1 Code of Best Practices on Corporate Governance……………… 2.5 Principles of Good Corporate Governance and Good Practice Recommendation…………………………………………………… 2.6 The Principles of Good Corporate Governance for Listed Companies…………………………………………………………… 2.7 Board and Management Training ………………………………… 2.8 Summary of Reviewed Literature…………………………………. Reference…………………………………………………………….. Chapter Three: RESEARCH METHODOLOGY………………… 3.1 Introduction………………………………………………………….. 3.2 Methods of Data Collection………………………………………….. 3.3 Sources of Data Collection…………………………………………… 3.4 Population and Sample of the Study…………………………………. 3.5 Sample Size Determination………………………………………….. 3.6 Method of Data Presentation and Analysis………………………….

Reference………………………………………………………………. Chapter Four: DATA PRESENTATION AND ANALYSIS……… 4.1 Introduction………………………………………………………… 4.2 Data Presentation…………………………………………………… 4.3 Data Analysis……………………………………………………….. 4.4 General Data Analysis………………………………………………. Reference……………………………………………………………….. Chapter Five: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS……………………………………………….. 5.1 Summary of Findings……………………………………………….. 5.2 Conclusion…………………………………………………………… 5.3 Recommendations…………………………………………………… 5.4 Area For Further Study……………………………………………… Bibliography……………………………………………………………

CHAPTER ONE

1:0 INTRODUCTION

In the recent time there have been an increasing number of high

profile corporate failures around the world, has sparked off a lot of enquiry

as to the reasons why well-established and respected organization failed.

Actually, corporate failure today is a global issue, on the international

science the global economic crisis had resulted to the collapse of large

companies like Euron, world com, Rank Xeror, paronglat, Bank of credit

and commerce internation (BCCI) and large-scale crisis that rocked almost

every financial institution, capital market and public organization etc.

In Nigeria, corporate failure is very rampant in the oil market,

financial services sector some years back and even at present. A lot of

banks and listed companies shut down be cause of one problem or another is

nebulous. Soludo (2006) Limited that by 1998 a total of 26 banks have

been liquidated and at the time of consolidation in 2005. 11 banks were

already dead literally. He further said that, outside the banking institution,

creative accounts of African petroleum where it concealed debts in execss of

N20 billion, over valuation of shares of involving Bankolans securities and

others are signals of impending doom for these companies. What there is the

cause of corporate failure in both local and international listed and unlist,

quoted and unquoted, police and private companies?

John clutter buck in Al-Faki (2006:5) high righted that companies that

failed shared some common characteristics and they includes

a) Leadership of the company is vested in an individual who combines

the office of chairman and Chief Executive with domineering

tendency.

b) President violation and non—compliance with internal control of the

company by the company b y the chief Executive.

c) Optimistic {or even distorted} rather than prudential financing

reporting

d) Irregular board meetings, often without adequate information given in

advance.

e) Mineral disclosure in the accounts of the company.

Thus it is the combination of these factors that undermine the ability

of companies to withstand economic down turn thus leading to a collapse. In

Nigerian listed companies scenario issues such as lack of probity,

transparency, integrity and accountability, inflation of balance sheet with

unearned income, weak capital base, unskilled and inefficient management,

window dressing of account and poor environmental as well as incentive

almost contributed to dissolution or winding- up of many companies.Uche

{2001b} identified certain reasons that results to early indigenous bank

failures in Nigeria as, “mismanagement, and accounting incompetence.

What then is the adequacy of bank and listed companies legislations in

controlling and regulating the practices in these industries. The question is

pertinent, because in spite of the existing legislation, a number of failures

and winding- up have been recorded in the industry.

In an attempt to design codes that will be appropriate to quell these

irregularities, global phenomenon termed “corporate Governance” came into

being. Today it has become a contemporary issue which has dominated the

interest of all business, legal and government circles worldwide.so,corporate

governance is the set of processes, custorms,policies, laws and institution

affecting the way a corporation is directed, administered or controlled.

Corporate governance also includes the relationships among the many

stakeholders involved and the goals for which the corporation is governed.

The principal stakeholders are the “shareholders, management, and the board

of directors. Often stakeholders include labors {employees} . customers,

creditors {eg,banks bondholders},suppliers, regulators and their community

at large. Therefore, corporate governance is a multiceted subject. An

important theme of corporate governance is to ensure the accountability of

certain individuals in an organization through mechanisms that try to reduce

or eliminate the principal-agent problem. There has been received interest

in the corporate goanance practices of modern corporations since 2001,

particularity due to the high-profile collapses of a number of large United

States firms such as “Enron corporation and MCI Inc. (Dignam and Lowry,

2006:15).

1.1 BACKGROUND OF THE STUDY

The issue of good corporate governance is therefore an imperative for

ensuring successful corporate performance. Building good corporate

governance as a shared responsibility among all stakeholders, each of whom

may exert pressure to move an institution in a by slightly different direction.

In this regard, although the mistivations of the various players are different,

they can and should be mutually supportive.

In a global context, corporate Governance is a topical issue that

gained prominence or momentum in United Kingdom towards the end of the

last century. Many reports have been issued on this subject matter in UK

and around the globe. Some of these reports include Cadbury committee

report, Greenbury report, the Hampel report, the Tumbell committee report

the King’s report ( so with Africa) Sarbane- Oxley Act (USA) and OECD

Then in Nigeria we have Peterside report, Bankers committee report, and

CBN report. Each of these reports camp up with different suggestions on

the subject matter but shared almost similar definitions. (Okagbue and

Aliko, 2005).

Udoma (2008:1) in an annual conference reiterates that a lot of

emphasis in now being placed on corporate governance as a result of high

profile corporate scandals locally and nationally. In Nigeria, corporate

governance. Related case involving Cadbury Nigeria PLC represents a good

example. The response of the securities and Exchange commission was

therefore aimed at enforcing best corporate governance practices in line

with the provisions of the Investments and securities Act 2007, the SEC

rules and regulations, the code of corporate governance and international

best practices.

The issue of corporate governance is also presently receiving priority

attention from the securities and Exchange commission which has set up

a committee to review the code of corporate Governance. The terms of

reference of the committee include:

- To review the Nigerian corporate Governance code for public

companies and to examine, in the light if recent experience how

effective it has been in improving the quality of corporate

governance.

- To identify weakness in, and constraints to good corporate

governance in public companies in Nigeria and recommend

appropriate measures to address such weaknesses and constraints

- To examine and recommend ways of effecting greater compliance

by public companies with the code, and

- To examine and advise on any other issue relevant to promoting

good corporate governance practices by public companies.

Subsequent to the above background, the international organization of

securities commissions (10SCO), the standard setter for securities

commission worldwide of which the Securities and Exchange Commission

is a member, requires that all members foster good corporate governance the

rough legislation, regulations and code of good corporate governance. The

10SCO position is among other things, intended to review the components

of financial systems and ensure transparency and good governance.

Essentially, its principles on market legislation are based on the three

objectives which are “investors protection, ensuring that markets are fair,

efficient and transparent and the reduction of risks. (Udoma, 2008).

Okagbue and Aliko (2005) noted that Cadbury report defined

corporate governance as the system by which companies are directed and

controlled. While in 1995, Greenbury code went beyond Cadbury report to

stipulate, that directors remuneration and detailed disclosures are to be given

in the annual report. In 1998, Hampel report made little modifications in the

areas of duties of executive and non executive director’s shareholders and

AGM, accountability, audit and reporting.

In another similar vein, corporate governance is describe as all the

influence affecting the institutional processes including those for appointing

the controlled and or regulations involved in organizing the production and

sale of goods and services. Describe in this way, corporate governance

includes all types of firms whether or not they are incorporated under civil

law.

Bob ticker in Al-faki (2006) defined it as essentially the exercise of

power over the modern corporation (large and small) holding company and

subsidiary listed and private. Wofensohin (the former World Bank president)

defined corporate governance in terms of what have come to be generally

considered as the principles of corporate governance. To him corporate

governance is all about promoting corporate fairness transparency and

accountability.

Peterside committee (2003) accepted the definition of the subject

matter as “the way and manner in which the affairs of companies are

conducted by those charged with the responsibility, which has a positive link

to national growth an development; giving to the peculiarity and fragility in

the banking business a special code of corporate governance for banks and

other financial institutions in Nigeria was drafted by the bankers committee

in 2003. The bankers committee defined it as being about “building

credibility, ensuring transparency and accountability as well as maintaining

an effective chain of information disclosure that would foster good corporate

performance.

Unegbu (2005) mentioned as modern corporate governance, he

defined it as laws and regulation that affect the private ordering to corporate

activities necessary for efficient competitive performance and far treatment

of those who depend on the corporation an dare impacted by it’s action.

Another school of thought defined corporate governance as being concerned

with low company is structured and controlled internally to ensure that the

business is run lawfully and ethically with due regard to all stakeholder

(Alfaki, 2006).

Ariemena (2005) sees corporate governance as being a concept which

ensures that organizations is ran in a responsible manner for the long run

survival within the environment it operates and for the overall well being of

the economic system. According to him, the effect of this concept expounds

into the wider economic system.

In a board culture of corporate governance business author Gabrielle

O’Donovan defines corporate governance as “ an internal system

encompassing policies processes and other stakeholders by directing and

controlling management activities with good business savvy, objectivity,

accountability and integrity. Sound corporate governance is reliant on

external market place commitment and legislature plus a healthy board

culture which safeguards policies and processes.

O’Donovan goes on to say that the perceived quality of a company’s

corporate governance can influence its share price as well as the cost of

raising capital. Quality is determined by the financial markets legislation and

other external market forces plus how policies and processes are

implemented and how people are led. External forces are, to a large extent

outside the circle of control of any board. The internal environment is quite a

different matter and offers companies the opportunity to differentiate from

competitors through their board culture (O’Donovan, 2003:2)

Report of SEBI committee (India) on corporate governance defines

corporate governance as the acceptance by management of the inalienable

rights of shareholders as the true owners of the corporation and of their own

role as trustees on behalf of the shareholders. It is about commitment to

values, about ethical business conduct and about making a distinction

between personal and corporate funds in the management of a company.

In a general note corporate government in its reunification is used as a

system of structuring operating and controlling a company with a view to

achieve long term strategic goals to satisfy shareholders creditors employees

customers and suppliers and complying with the legal and regulatory

community needs. A times it looks into the ethics and a moral duty. A

critical analysis of the definitions reveals that corporate governance is all

about the way and manner the corporate organization is to be performed

principally by the board and other stakeholders. It seeks to establish and

moderate relationship between boards and their shareholders company

regulation and other stakeholders. It also ensures a proper and efficient

system of regulating directors so as to restrain them from abusing their

powers.

Therefore, as this study designed to investigates critically the principles of

good corporate governance and best practice recommendation in Nigeria

listed companies; regulation, commitment and compliance. A side look on

this construct is targeted to underscore the characteristics, operability’s

activities and convergences in mutual respect that undermine the

establishment in execution and culture of interaction within their business

objectives. In every establishment the first major step in creating good

governance is for all players to mutually agree on the common corporate

goals which must be specific, explicit and consistent. In the process there

will be trade off and delicate balancing of various interest groups. But once

the goals are determine and the respective roles of the various players are

explicably defined there should be an incentives structure and sanctions

which must be effectively monitored and enforced.

1.2 STATEMENT OF PROBLEM

The recent wide spread of corporate scandals and failures had their

root in dishonest management decisions and in some cases outright cover-

ups of illicit activities and has brought to the fore the role which the pursuit

of narrow group interests played in wrecking these corporations and

consequently the lives of millions of innocent citizens who has stake in

them. It is also against this back up of that there is now need for a global

commitment to pursue and promote good corporate governance practices in

corporations all over the world and with it came the establishment of

standards which corporations and countries are encourage to adopt. It needs

to be emphasized here that balancing stakeholders interests goes beyond

protecting the interest of shareholders in an individual organization.

Indeed, it revolves around embracing good corporate governance that

sets the rules and practices that govern the relationship between managers

and shareholders of corporations as well as stakeholders like the public

employees pensioners and local communities while at the same time

ensuring transparency fairness and accountability. In Nigerian scene the

corporate governance is challenged with issues like, weak capital base, gross

insider abuses resulting in huge non-performing loans and credits, late or

non-publication of annual accounts that obviates the impact of market

discipline in ensuring baking soundness, weak corporate governance,

inaccurate reporting and non-compliance with regulatory requirements

falling ethics and de-marketing of other banks in the industry, erosion of the

confidence of the public and very poor global rating.

Uche (2001b) summarily insinuated that incidence of fraud and

unethical practices were behind the debacle of these banks and other

institution. Persistent fraud and unethical issues are then the indices of weak

corporate governance. Thus, weak corporate governance has been a hydra-

headed problem to the industry over since the emergence of indigenous

bank. Many recipes have also failed to strengthen the integrity and enthrone

ethical practices. Weak corporate governance is the most disturbing issue in

the industries today. Especially in banking industry now that mega banks

have emerged from the consolidation more challenges are posed to corporate

governance because failure of a large bank could cause systemic problems.

The pressure is high now because failure of the industry is tantamount

to the collapse of the entire economy. This is so because the listed

companies (blue chip) are the driver of the economy. Failure of them could

mar the perception of the whole public and international investors.

1.3 OBJECTIVES OF THE STUDY

The key objectives of this study were as follows:

1. To investigate whether the corporate governance practice is in any

form balancing stakeholder interest.

2. to ascertain the fairness, transparency and accountability of returns

given to shareholders of the Nigerian listed companies.

3. to determine the extent of compliance and commitment of listed

companies to the codes

4. to perform a comparative study of how value added is distributed to

the various stakeholders as regards the regulation of the governance.

5. to establish how equitable is the returns of the shareholders among the

listed companies in Nigeria

1.4 RESEARCH QUESTION

The research questions for the study are as follows

1. How is the good corporate governance practice be practilized by your

firms in balancing of stakeholders interest

2. to what extent is fairness, transparency and accountability

operationlized in returns given to shareholders as recommended by

the principles?

3. how adequate is the compliance and commitment of the listed

companies to the codes?

4. how is the relativity of value added of listed companies distributed

among the stakeholders as regards the reputation of the governance?

5. how realistic is the equitability of the returns shareholders of Nigerian

listed companies over the years?

1.5 SIGNIFICANCE OF THE STUDY

Corporate governance in Nigerian listed companies is a pertinent issue

especially in the post consolidation period and quest for organization to

expand or diversity and equally where mega banks have emerged and suit

compliance to the code is mandatory to shield against persistent systemic

distress. Good corporate governance and best practice recommendation is

not an end in itself but a means. It is not about strict policing of the

managers who are company agents, the bottom line matter is about the

superior corporate performance based on a reasonable cost and mutual

supportive.

However, this study attempt striking an appropriate balance between

various stakeholders interests as prerequisite for the integrity and credibility

of market institutions. To facilitates the building of confidence and trust that

allow corporation access to external finance and to make reliable

commitment to creditors, employees and shareholders.

It is notably imperative to restore and rebuilt the public trust and confidence

through the outcome of this study it will also serve as reference point to the

scholars students and the like at all time.

Finally, its recommendations and suggestions may act as terms of

reference to any further review of this codes.

1.6 SCOPE OF THE STUDY

The subject matter is a broad and complicated type. The complication

lies in the secrecy of the real account of what actually happen at the board

and management levels. The insiders and the insiders alone knows the depth.

The cases abound of creative account bodies and to the public. This level of

window dressing or inflated reporting conceals the extent of bank

mismanagement which may not be apparent to the whistle blower and to the

regulator. Fact finding and investigation in this study will not go beyond the

published reports of bank.

This study will x-ray the good corporate governance of the Nigerian

listed companies. The study will draw its conclusion based on 2000-2005

years comparative analysis of samples drawn from Nigerian and non-

Nigeria banks insurances conglomerate breweries food and beverages and

petroleum companies. The criteria for the selection will be discussed in

chapter three of this study.

1.7 LIMITATIONS OF THE STUDY

The corporate governance in the Nigeria situation is a contemporary

issue in the industry and as such not much has been written about the topic

in the Nigerian perspective. So, sourcing of materials (relevant

information) was an onerous job (that is paucity of information).

In addition, more thorough analysis of the subject matter will require the

availability of undiluted financial and non-financial details about the

industry. In Nigeria, it is a well known fact that companies misrepresent

facts and figures so as to conceal abuses and unprofessional practices

interest in the industries. Therefore, total reliance on the published

facts may limit the chances of optimum result in the research.

Again, the researcher is limited by the time constraints and financial in

capacitating were important limiting factors to this research.

1:8 DEFINITION OF RELATED TERMS

Corporate Governance:

O’ Donovan in Aboard culture of corporate Governance defines

corporate governance as an internal system encompassing policies, processes

and people, which serves the needs of shareholders and other stakeholders

by directing and controlling management activities with good business

savvy, objectivity, accountability and integrity.

Executive Director:

King 11 defines a director as a person who involved in the day-to-day

management and/or in the full time employee of the company, and /or any of

its subsidiaries.

Non- Executive Director:

Primarily is a director that is not involved in the day to day management

of the company and not a full time salaries employee of the company or any

of its subsidiaries.

Non- Executive Independent Directors:

CBN (2006) defines directors as those who do not represent any particular

shareholder interest and hold no special business interest with the bank and

are appointed by the bank on merit.

Banker is committee defines it as such directors who has other relationship

with management which could materially interfere with the exercise of no

significant financial or personal ties to management is free from any

business or his/her independent judgment, and receives no compensation

from institution other than directors remuneration or shareholders

dividends.

King 11, defines a non-executive director as director who is not a

representative of a shareholder and who has not been employed by the

company in any executive capacity for the preceding three financial years.

Compliance

Compliance is describes as either a state of being in accordance with

established guidelines, specifications or legislation or the process of

becoming so (http: //searchdatamanagement. Techtarget.Co

REFERENCES

Aniemena, u. (2005) Good corporate governance the Banking system,” A

paper delivered at the 3rd Pan African Forum Corporate Governance

on behalf of West African Bankers’ Association September 2005.

Al-Faki (2006) Trends in corporate Governance in Nigeria,. The TideNews

Jan. 12

Bankers Committee Report (2006) Code of Corporate Governance for Banks

And Other Financial Institutions in Nigeria.

CBN (2006) Code of corporate Governance for Banks in Nigeria post

Consolidation (Draft).

Dignam, A. and LOWVY, J. (2006) Company law, New York: Oxford

University press

King 11 Code of corporate Governance, South Africa.

Okagbue and Aliko, T. (2005) Banking sector Reforms in Nigeria,

international legal News.available at www.11n.com

O’ Donovan, G (2003) A Board culture of Corporate

Governance: Corporate governance International journal vol. 6 issue

3.

Peterside Report (2003) Code of corporate Governance in Nigeria

Soludo, C.C (2006) Liquidated Banks, Depositors, others will get their money,

An Interview of CBN Governor by South African Broadcasting

corporation (SAB)

Uche, U.C (2OO1B) Nigeria: Bank Fraud; Journal of Financial crime vol.8,

N0.3

Unegbu, O. (2005) Corporate Governance in post consolidation Banking

industry in Nigeria issue and challenges available: www. Vanguard.

Con/articles.

Udoma, U.U. (2008) Keynote Address presented at the 2008 Annual

conference of the institute of chartered secretaries and Administrators

of Nigeria (K.S AN) available at Wttp: //WWW. Sec-gov.ng/ theme /

default/ pdt/ publications).

Wttp: // searchdatamanagement. Techtarget. Com.

CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1 A BRIEF THEMATIC HISTORY OF CORPORATE GOVERNANCE

It is currently fashionable to talk about the history of corporate

governance in terms of path dependence and to assume that as in the natural

science complex systems can be reduced to a few simple rules. Corporate

structures, it is said depend in part on the structures a country had in earlier

tires in particular the structures with which the economy started. These

structures also bias the legal rules in terms of what is efficient in any given

country and the interest group politics, which determine which rules, are

chosen. The interplay of historical forces which head to any given state of

affairs are often many and complex. This is particularly true of economic

history and the relationship of law and economics.

Hurst (1970:1), tracing the history from the public law privilege

model stated that the earliest form of incorporation in the common law was

by papal bull or royal charter. Rights of association and corporate status

sprang from the church or the crown. And the abuse of defunct charters and

other excesses led to the UK Bubble Act 1720 which set back the

development of he modern corporation for sometime.

Formoy (1923:21), in his comment said that, the term “director” was

first used generally at the end of the seventeenth century. It was used by he

Bank of England and Bank of Scotland. Despite these restrictive trends

entrepreneurs and their lawyers managed to erode the Bubble Act by Deed

of settlement companies and many of our modern principles and problems in

the law spring from that source. The Deed of settlement was built on the

foundation of trust and partnership and was at best an inchoate corporation.

Van den Berghe and De Ridder (1999:4) trys to focus their own trace

as at issue of Banking capitalism, looking at the colonial and post-colonial

systems that suffers from a lack of capital. Where few immigrants bring

much capital. There is a need for investment capital. The state needs capital

to provide for infrastructure and atimes raises some from taxation but at a

small base, while the rest is raised through debt capital. This results in the

next phase of Banking capitalism which characterized the history of the

USA, Australia and New Zealand in the Nineteenth century and into the t

twentieth century at least until the 1930s. Bank finance of business was

usually debt finance although some investment or merchant bank took equity

interests as well. Intensive investment in equity has been restricted by

banking rules such as capital adequacy and other prudential regulation.

McQueen (1991:22), as one of the proponent of imperialism and the

imperial model”, concerns attention in imperial commerce that dominated

the economics and the local statutes that were based on the UK companies

legislation. The larger local banks were often owned or attiliated with UK

banks by the turn of the century. A legacy of this dependency survives in the

fact that a significant number of Australian and New Zealand listed

companies are owned by other companies and the ultimate ownership is

often in foreign hands.

Then the era of “managerial capitalism” in dictates a period as

companies adapted to the corporate form, some needed further equity capital

and went public. Disclosure regimes developed backed by a degree of self-

regulation by the securities industry. Many English companies in the late

Nineteenth century issued preference shares in order for the owner to retain

control (Farrar, and Hannigan, 1998:226). Later ordinary shares were floated

and there began the development of the separation of ownership and control

which had been foreshadowed by Marx and Leruin, and was documented by

Adolf Berle for of Colombia law school and Gardiner means of Harvard in

respect of the USA. This era marks the ascendancy of professional

management in the absence of ownership blocs large enough to represent a

countervailing power. It created the agency problem as Adam Smith had

anticipated. Management in the absence of a countervailing power have

attendance to pursue their own self interest at the expense of the corporation.

The periods from 1960 until the 1980s represented the supremacy of

management. The management of the larger corporations to some extent

were the masters and not the servants of finance. However, the stock market

crash 1987 precipitated the collapse of confidence and heralded a number of

changes (Ester brook and Fischel, 1991:4). To ward of the increasing

politicization of reform of corporate law, to combat increased shareholder

activism and simply out of self protection management of leading companies

through their interest groups and in cooperation with institutional investors

began to give serious attention to the development of self regulation of

“corporate governance” in the 1990s. This led to a number of reports and

codes or guidelines on corporate governance.

Farrar and Hannigan (1998:579), adding to this growth issue of

corporate governance ensue the stage called “institutional Investor

capitalism”, this is at the era of second world war characterized by increased

investment by institutional investors in public corporations. There has been

the use of superannuating and pension schemes, insurance and other forms

of indirect investment. Trustee investment rules have been relaxed enabling

trustees to invest in equities. In addition to this, the traditional domination by

institutions of the bond market and we have the beginning of the growth of a

significant countervailing power if the economic strength is harnessed to a

common cause. Listed corporations are at stage becoming the servants of

global financial activity rather than its masters. Institutions sometimes

encounter legal problems in increased shareholder activism. Another stage

that occurred is the reference shareholdings” which Van den Berghe and De

Ridder (1997:17), refer as the presence of a significant shareholder with a

long term relationship with the corporation and their closer involvement in

and contribution to the strategic development of the company. The

governance problems with such shareholding are excessive power positions

and potential conflict of interest in-group transactions. Hence, the impact of

globalized standards of corporate governance is to promote equal treatment

of shareholders and to dismantle elaborate crossholdings and interlocking

directorships.

Other trends that added impetus to the historic structuring and

development of corporate governance are “the evolution of multi-national

and transnational corporations, modernization and reforms and development

of a New model of democratic capitalism”. The notable Acts that gives

credence is the “companies Act 1993 that provides the objects of the

legislation are to reform the law and in particular:-

a) To reaffirm the value of the company as a means of achieving

economic and social benefits through the aggregation of capital for

productive purposes, the spreading of economic risk, and the taking of

business risk and;

b) To provide basic and adaptable requirement for the in corporation,

organization, and operation of companies and;

c) To define the relationships between companies and their directors,

shareholders, and creditors;

d) To encourage efficient and responsible management of companies by

allowing directors a wide discretion in matters of business judgement

while at the same time providing protection for shareholders and

creditors against the abuse of management power, and;

e) To provide straight forward and fair procedures for realizing and

distributing the assets of insolvent companies.

Meanwhile, the corporations Act 1989 which became known as the

corporation law. This has been subsequently amended. The legislation stands

as an obese monument to complexity and confused thinking. The complexity

was the subject of he simplification task force who succeeded in further

complicating the law, particularly the law of corporate governance. This was

followed by “CLERP” the Corporate Law Economic Reform Programme.

The reform was well intentioned and pursued the following economic

principles. These are:-

- Market freedom,

- Investor protection,

- Information transparency,

- Cost effectiveness,

- Well targeted regulatory framework,

- Regulatory neutrality and flexibility and

- Business ethics and compliance.

Finally Van den Berghe, concluding the history from his tune argue

for the evolution of a democratic model of corporate governance. This will

be characterized by:-

a. The knowledge worker empowered as a result of the

communications revolution.

b. A power shift from shareholder towards the knowledge worker.

c. A sense of shared values.

This is to say that the history of corporate governance shows a history of change

and adaptation to change but the contemporary triumph of democracy and

capitalism. (http://www.austli.edu.au/au/journals/BondLRev/1999/17.html).

2.2 CORPORATE GOVERNANCE IN THE PUBLIC SECTOR: THE

ROLE OF RISK MANAGEMENT:

It is impossible for an organization to achieve effective corporate

governance without effective risk management and the organization’s risk

manager has a crucial role to play in its strategy for corporate governance.

So, ensuring effective risk management as part of the overall arrangements

for corporate governance offers a number of benefits. It provides them with

a means of improving strategic, operational and financial management. It

can also help to maximize opportunities and minimize loss events, which

might result in financial losses, service disruption, bad publicity, and threats

to public interest or claims for compensation.

Therefore, there is corporate governance and corporate governance.

Most experts would agree that much of it is a “hearts and minds” issue.

Certainly, one of the key stones to achieving effective corporate governance,

an integrated and holistic approach to risk management is very much a

cultural issue.

Johnson and Scholes (1998:2), opines that corporate governance is

concerned with both the functioning of the organization and the distribution

of power between different stakeholders. Atimes, it is concerned with

structures processes for decision-making and accountability, controls and

behaviour, at the top of organization. Corporate governance determines in

this phase whom the organization is trying to serve and how eh purposes of

the organization should be decided.

In 1992 the committee on the financial aspect of corporate

governance, defines corporate governance as the system by which

organization are directed and controlled. In other words, it is about the

process by which organizations are directed and controlled. In other words,

it is about the process by which organizations manage their business,

determine strategy and objectives, and implement them. Corporate

governance at this viewpoint is the system that ensures that organization

- Openness

- Integrity.

- Accountability

In effect, the concept relates to the roles, responsibilities and accountability

of every employee from top management down. Hampel Committee Report

(1998) emphasized that good corporate governance is not just a matter of

prescribing corporate structures and complying with a number of hand and

fast rules and procedures. Hampel argues that there is a need for broad

principles to ensure the effective implementation of good corporate

governance. The importance of corporate governance lies in its contribution

both to business prosperity and accountability.

In the public sector, we can see this replicated in the government’s

modernizing agenda for public services which broadly is about redressing

the same imbalance. It takes, in its most tangible form the drive for

continuous improvement known as “Best Value”. Naturally, internal policy

making control and the process of accountability remain essential to sound

governance but leadership, innovation and partnership are also crucial.

The Turnbull Report (1999), that is the “Combined Code emphasized

that corporate governance is mainly an internal control and risk management

issue encompassing the policies processes, tasks, behaviour’s and others

aspects an organization that are taken together to facilitates its effective and

efficient operation. This enables the organization to respond appropriately to

significant business, operational finance, compliance and other risks that

threaten the successful achievement of the organizations strategic and

operational objectives.

CIPFA and SOLACE (2001), defines corporate governance as the

system by which local authorities direct and control their functions and

relates to their communities, reflects the modemising agenda for public

services in areas of internal policy making, control, accountability,

community leadership, innovation and partnership.

In its 1995 report, “corporate governance in the public sector”, CIPFA

concluded that the issues raised in the Cadbury report were just as relevant

to public sector organizations and urged all organizations to adopt the

principles espoused by Cadbury. Thereby, the practice of corporate

governance in the public sector organisaion all this while focus on activities

likes “ethical framework, fraud, wrongdoing, and whistle blowing”. It is

worth noting that the number of well public is particularly in the area of risk

management may indicate that focusing on financial controls as a overall

corporate governance may not be sufficient.

The CIPFA and SOLACE guidance, which although aimed mainly at

local authorities is relevant to all public sector bodies, outline that the

fundamental principle of corporate governance are:-

- Community focus

- Service delivery arrangements

- Structures and processes

- Risk management and internal control

- Standards of conduct.

In term of operationalizing these actions call for each organization

needs to:-

1) Develop and maintain sound systems for identifying and evaluating

strategic and operation opportunities and risks on an integrated basis.

2) Ensure strategic plans are developed through these mechanisms.

3) Allocate sufficient resources for risk management.

4) Put in place effective risk management system

5) Ensure risk management is delivered by rained and experienced

people.

6) Make effective arrangements for the review of risk management

activity.

7) Publish an annual statement and assessment of risk management

effectiveness.

Thus, risk management an internal control should (be a systematic

strategy, framework and processes for managing risks, identify and evaluate

all significant strategic and operational risks on an integrated and allocate

resources according to priorities).

Again the senior management board should consider (nature and

extent of the risks, the threat of such risks, reduction mechanism and the cost

and benefits related to operating relevant controls).

ALARM (2001), denotes that round internal control and risk

management support entrepreneurship. So, risk is an ever-present aspect of

the listed companies business world. Organizations set for themselves

strategic and business objectives then have to manage the risks that threaten

the successful achievement of those objectives. The role of effective risk

management is to mange risk in the most appropriate w ay rather than to

eliminate it. All the advice issued by the public sector professional and other

bodies on corporate governance stresses that an integrated approach to risk

management is an essential subset of corporate governance.

Risk management to this end can be describe as the identification,

analysis and economic control of those risks which might prevent an

organization achieving its objectives. Frankly, effective corporate

governance requires that risks management be integral to policy, planning

and operational management. Applying the risk management cycle, ie

identifying, analyzing, controlling and monitoring risk will help strategic

decision makers and mangers make an informed decisions about the

appropriateness of adopting policy or service delivery option. In addition,

risk management must be holistic, that is it must be concerned with the

whole range of business risk faced by the organization. A shared corporate

approach is important if risks are to be identified and managed

systematically and consistently across the organization. A corporate risk

management strategy provides a frameworks to structure this approach.

Changing an organization’s culture-particularly in regard to the

management of risk can only be an evolution process.

ALARM (2001), in their study highlighted “benchmarks” to

determine what extra it needs to do to ensure a comprehensive approach in

risk management viz:-

a. Ensure that the organization’s risk management initiative is driven

form the top of the organisaion.

b. Define and document the organization’s policy.

c. Re-visit the policy statement on a regular basis.

d. Appoint a “champion”

e. Establish a risk management working group

f. Ensure that those responsible for strategic decision-making are made

aware of the risk management implications of decisions they are being

asked to make.

Although, where public sector organizations do not currently insert

such standard paragraphs in council or committee or board agenda items it is

suggested that they could consider making arrangements for this to happen

in future:-

i) Group and individual roles and responsibilities for corporate

governance need to be defined and understood by all concerned.

ii) Formally assign the roles and responsibilities for risk management.

iii) Ensure that all risks to the organization’s successful achievement of

strategic and operational objectives are properly identified, analyzed

and monitored on a regular basis.

iv) Ensure senior managers have an active an structured knowledge of the

whole range and relative priorities of risks that they have to manage.

v) Ensure that staff at every level share senior mangers understanding of

risks and priorities and that programme are communicated and

embraced through the organization.

vi) Ensure that business/service recovery plans for the organization are

developed and fully tested for unacceptably high residual risks.

vii) Ensure that Best value reviews incorporate as standard, a

review of internal control and risk management for the service under

review. (IRM, 2001).

2.3 CORPORATE GOVERNANCE STANDARD AND CONTROL

MECHANISM IN COMPLIANCE

Marco, Bolton and Roell (2004:2), view points inserted that corporate

governance mechanism and controls are designed to reduce the

inefficiencies that arise from moral hazard and adverse selection. For

example, to monitor managers behaviour, an independent third party (the

auditor) attests the accuracy of information provided by management to

investors. An ideal control system should regulate both motivation and

ability. The areas to look into in this study are viz:-

1) Internal Corporate Governance Controls:

The internal corporate governance controls, monitor activities and

then take corrective action to accomplish organizational goals.

Example includes:

a) Monitoring by the Board of Directors:- The board of directors

with it legal authority to hire, fire and compensate job

management, safeguards invested capital. Regular board meetings

allow potential problems to be identified, discussed and avoided.

Whilst non-executive directors are thought to be more

independent, they may not always result in more effective

corporate governance and may not increase performance. Different

board structures are optimal for different firms. Moreover, the

ability of the board to monitor the firm’s executives is a function of

its access to information. Executive directors possess superior

knowledge of the decision-making process and therefore evaluate

top management on the basis of the quality of its decisions that

lead to financial performance outcomes. It could be argued

therefore that executive directors look beyond the financial criteria.

b) Balance of Power: The simplest balance of power is very

common, it require that the president be a different person form the

Treasurer. This application of separation of power is further

developed in companies where separate divisions check and

balance each others actions. One group may propose company-

wide administrative changes, another group review and can veto

the changes, and third group check that the interests of people

(customers, shareholders, employees), outside the these groups are

being next.

c) Remuneration: Performance based remuneration is designed to

relate some proportion of salary to individual performance. It may

be in the form of cash or non-cash payments such as shares and

share options, superannuation or other benefits. Such incentive

schemes however are reactive in the sense that they provide no

mechanism for preventing mistakes or opportunistic behaviour,

and can elicit my optic behaviour.

2) External Corporate Governance Controls:

External corporate governance control encompass the controls

external shareholders exercise over the organization. Example include

viz:

- Competition

- Debt covenants

- Demand for and assessment of performance information

- Government regulations

- Managerial labour market

- Media pressure and

- Takeovers.

2.4 CHALLENGES AND CODES OF BEST PRACTICES

CORPORATE GOVERNANCE:

Lidoma (2008:6), x-ray the in-depth challenges of corporate

governance for Banks post consolidation as:-

a) Technical Incompetence: of Board and Management: In view of the

greatly enhanced resources of the consolidated entities board members

may lack the requisite skills and competencies to effectively redefine,

re-strategize, restructure, expand and/or refocus the enlarged entities in

the are as pf change of corporate identities, new business acquisitions,

branch consolidation, expansion and product development.

b) Relationships Among Directors: Boardroom squabbles could be an

issue due to different business cultures and high ownership

concentration especially in banks that were formerly family or “one-

man” entities. The dominance of a “key man” could also emerge with

the attendant problems.

c) Relationship Between Management and Staff: Thus, squabbles

arising from knowledge groups, harmonization of roles and salary

structure could also manifest among staff and management of

consolidating banks with the potential to create unhealthy competition

and a counter-productive working environment.

d) Increased Levels of Risks: Currently, very few banks have a robust

risk management system in place. With the huge amount of funds that

will be available to them and the significantly increased legal lending

limits, banks will be financing more long-term mega projects in the real

sectors of the economy as opposed to the existing working capital/trade

financing. Given the expected significant increase in the level of

operations the banks will be facing various kinds of risks, which I not

well managed will result in significant losses.

e) Ineffective Integration of Entities: Banks that would have completed

the process of merging might continue to operate independently rather

than as a single entity.

f) Poor Integration and Development of Information Technology

Systems, Accounting Systems and Records: Banks with different IT

systems (banking application, database platform, operating systems,

human resource applications, hardware, server configuration, and

network and telecommunication infrastructure) as well as different

accounting systems an records will have to fuse and this could pose

problems if not well managed.

g) Inadequate Management Capacity: Directors and Managers will be

running a much larger organization and controlling a significantly

higher level of resources. Adequate management capacity is needed to

efficiently and profitably run a lager organization.

h) Resurgence of High Level Malpractices: To boost income as a result

of intense competition and lack of enough viable projects, malpractices

may resurface post-consolidation.

i) Insider-Related Lending: If consolidation should fail to achieve

transparency through diversification in bank ownership, the pervasive

influence of family and related party affiliations may continue resulting

huge levels of insider-abuses and connected lending.

j) Rendition of False Returns: Similarly, rendition of false returns of the

regulatory authorities and concealment of information from Examiners

to prevent timely detection of unhealthy situations in the banks may

continue as a result of lack of transparency and pressure to boost

income.

k) Continued Concealment:

l) Inadequate Operational and Financial Controls.

m) Absence of a Robust Risk Management System.

n) Disposal of Surplus Assets

o) Transparency and Adequate Disclosure of Information.

2.4.1 CODE OF BEST PRACTICES ON CORPORATE GOVERNANCE:

Udoma (2008:9), listed some of the facts of action sought for best

practices:

i) The establishment of strategic objectives and a set for corporate

values, clear lines of responses ability and accountability.

ii) Installation of a committed and focused Board of Directors which

will exercise its oversight functions with a high degree of

independence from management and individual shareholders.

iii) A practice and committed management team

iv) There should be adequate procedures to reasonably manage

inevitable disagreements between the Board, management and staff

of the bank.

v) The board should meet regularly at a minimum of four (4) regular

meetings in a financial year. There should also be adequate

advance notice for all Board meetings as specified in the

memorandum and Article of Association.

vi) The Board should have full and effective oversight on the bank and

monitor its executive management.

vii) There is a well-defined and acceptable division of responsibilities

among various cadres within the structure of the organisaion.

viii) There is balance of power and authority so that no individual or

coalition of individuals has unfettered powers of decision-making.

ix) The articles of Association should clearly specify those matters

that are exclusively the rights of the Board to approve apart from

those for notification.

x) The number of non-executive directors should exceed that of

executive directors.

xi) All Directors should be knowledgeable in business and financial

matters and also posses the requisite experience.

xii) There should be a definite management succession plan.

xiii) Shareholders need to be responsive, responsible ad enlightened.

xiv) Culture of compliance with rules and regulations.

xv) Effective and efficient Audit Committee of the Board.

xvi) External and internal auditors of high integrity, independence and

competence.

xvii) Internal monitoring and enforcement of a well articulated code of

conduct/ethics for Directors, Management and staff.

xviii) Regular management reporting and monitoring system.

2.5 PRINCIPLES OF GOOD CORPORATE GOVERNANCE AND

GOOD PRACTICE RECOMMENDATIONS:

Asx corporate governance council (2006:6) stated that the good

practice recommendations are not prescriptions. They are guidelines,

designed so produce an outcome that is effective and of high quality and

integrity. This document does not require a “one size fits all” approach to

corporate governance. Instead, it states aspirations of good practice for

optimizing corporate performance and accountability in the interests of

shareholders and the broader economy.

Companies are encouraged to use the guidance provided by this

document as a focus for re-examining their corporate governance practices

and to determine whether and to what exert the company may benefit from a

change in approach having regard to the company’s particular

circumstances. This principles and recommendations will be analyzed in

steps:-

Principle I:

LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT:

Companies based on this principle should recognize and disclose the

respective roles and responsibilities of board and management. The

company’s framework should be designed to:-

- enable the board to provide strategic guidance for the company and

effective oversight of management.

- Clarify the respective roles and responsibilities of board members and

senior executives. In order to facilitate board and senior executives

accountability to both the company and its shareholders.

- Ensure a balance of authority so that no single individual has unlettered

powers.

The recommendations of this stage one call that “companies should

recognize and disclose the functions reserved to the board and those delegate

to senior executives. And the responsibilities of the board demands:-

- For overseeing the company including its control and accountability

system.

- Appointing and removing the chief executive officer, or equivalent.

- Where appropriate, ratifying the appointment and the removal of senior

executives.

- Providing input into and final approval of management’s development of

corporate strategy and performance objectives.

- Reviewing and ratifying systems of risk management and internal

control, codes of conduct, and legal compliance.

- Monitoring senior executives’ performance and implementation of

strategy.

- Ensuring appropriate resources are available to senior executives.

- Approving and monitoring the progress of major capital expenditure,

capital management, and acquisitions and divestitures.

- Approving and monitoring financial and other reporting.

Thus, the principle goes ahead to stress the issue of “allocation of

individual responsibilities”. And recommends that “companies should

disclose the process for evaluating the performance of senior executives, and

companies should provide the information indicated in guide to reporting on

principle I. The application of principles I in relation to trusts and externally

managed entities referred that”, the board and directors” should be applied

as references of the board and directors of the responsible entity of the trust

and to equivalent roles in respect of other externally managed entities.

Principle 2:

STRUCTURE THE BOARD TO ADD VALUE:

Companies should have a board of an effective composition, size and

commitment to adequately discharge its responsibilities and duties. An

effective board is one that facilitates the effective discharge of the duties

imposed by law on the directors and adds value in a way that is appropriate

to the particular company’s circumstances. The board should be structured in

such a way that it:-

- Has a proper understanding of and competence to deal with the current and

emerging issues of the business.

- Exercise independent judgement.

- Encourages enhanced performance of the company.

- Can effectively review and challenge the performance of management.

Ultimately, the directors are elected by the shareholders. However, the

board and its delegates play an important role in the selection of candidates

fro shareholder rote. And the recommendation here is “a majority of the

board should be independent directors”. The gearing focus “independent

decision-making, independent directors, regular assessments. Secondly, “the

chair should be an independent director”, role of the chair is to be

responsible for leadership of the board and for the efficient organization and

conduct of the board’s functioning. The chair should facilitate the effective

contribution of all directors and promote constructive and respectful

relations between board members and between board and management.

Again, this stage recommends that “the roles of the chair and chief

executive officer should not be exercised by the same individual. Also, the

suggested and demands the board should establish a nomination committee.

The purpose of the nomination committee. The purpose of the nomination

committee should be spelt out, the charter (terms of reference), the

composition of nomination committee and responsibilities of the committee,

selection and appointment process and re-election of directors. In addition,

the director competencies, board renewal, composition and commitment of

the board, the election of directors and re-appointment of directors should

not be automatic.

Therefore, this phase still reaffirms that “companies should disclose

the process for evaluating the performance of he board, its committees and

individual directors”. The performance of the board should be reviewed

regularly against previously agreed measurable and qualitative indicators.

And this should be carried out through “induction and education, access to

information, the board and the company secretary”. The companies should

provide the information indicated in the guide to reporting on principle 2.

Principle 3:

PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING:

In this phase, “the companies should actively promote ethical and

responsible decision-making. To be successful, companies need to have

regard to their legal obligations and the interests of a range of stakeholders

including shareholders, employees, business partners, creditors, consumers,

the environment and the broader community in which they operate. It is

important for companies to demonstrate their commitment to appropriate

corporate practices and decision-making.

Companies should:-

- Clarify the standards of ethical behaviour required to the board, senior

executives for all employees and to encourage the observance of those

standards.

- Comply with their legal obligations and have regard to the expectations

of heir stakeholders.

- Publish the policy concerning the issue of board and employee trading in

company securities and in associated products including products, which

operate to limit the economic risk of those securities.

As this phase recommends that, “companies should establish and disclose a

code of conduct as to:-

i) The practices necessary to maintain confidence in the company’s

integrity.

ii) The practices necessary to take into account their legal obligations

and the expectations of their stakeholders.

iii) The responsibility and accountability of individuals for reporting

and investigating reports of unethical practices.

The action plans embraced here appears clearly in “the purpose of a

code of conduct, application of a code of conduct. Also this principle

recommend that, “companies should establish and disclose the policy

concerning trading in company securities by directors, senior executives and

employees. And companies should provide the information indicated in the

guide to reporting on principle 3.

Principle 4:

SAFEGUARD INTEGRITY IN FINANCIAL REPORTING:

Companies should have a structure to independently verify and

safeguard the integrity of their financial reporting. This requires companies

to put in place a structure of review and authorization designed to ensure the

truthful and factual presentation of the company’s financial position. The

structure would include for example:-

- Review and consideration of the financials statements by the audit

committee.

- A process to ensure the independence and competence of the compnay’s

external auditors.

The recommendation on the phase calls for “the board should

establish an audit committee”. The purpose of audit committee is an efficient

mechanism for focusing on issues relevant to the integrity of the company is

financial reporting. And the importance of the audit committee is

internationally recognized. The second recommendation suggest that “the

audit committee should be structured so that it:-

- Consists only of non-executive directors

- Consists of a majority of independent directors

- Is chaired by an independent chair, who is not chair who is not chair of

the board.

- Has at least three members.

The third recommendation is that, “the audit committee should have a

formal charter”. In the charter comprises the responsibilities, meetings,

reporting. Equally, the principle recommends that, “companies should

provide the information indicated in the guide to reporting on principle 4.

Principle 5:

MAKE TIMELY AND BALANCED DISCLOSURE:

Companies should promote timely and balanced disclosure of all

material matters concerning the company. Companies should put in place

mechanism designed to ensure compliance with the Asx listing Rule

requirements such that:-

- All investors have equal and timely access to material information

concerning the company including its financial position performance,

owner shop and governance.

- Company announcement are factual and presented in a clear and balanced

way. “Balance” requires disclosure of both positive and negative

information.

The key recommendations call that “companies should establish and

disclose written policies and procedures designed to ensure compliance with

Asx listing rule disclosure requirements and to ensure accountability at a

senior executive level for that compliance. As such, companies should

provide the information indicated in the Guide to reporting on principle 5.

And continuous/regular disclosure policies and procedures should be

followed to eliminate surprises.

Principle 6:

RESPECT THE RIGHTS OF SHAREHOLDERS:-

Companies should respect the rights of shareholders and facilitates the

effective exercise of those rights. Companies should empower their

shareholders by:-

- Communicating effectively with them.

- Giving them ready access to balanced and understandable information

about the company and corporate proposals.

- Making it easy for them to participate in general meetings.

And the principle recommends that, “companies should design and

disclose a communications strategy to promote effective communication

with shareholders and encourage. (ie electronic communication, meetings,

website).

Secondly, companies should provide the information indicated in he

guide to reporting on principle 6.

Principle 7:

RECOGNIZE AND MANGE RISK:

Companies should establish a sound system of risk oversight, risk

management and internal control. Risk management is the culture, processes

and structures that are directed towards taking advantage of potential

adverse effects. A risk management system should be designed to:-

- Identify, assess, monitor and mange risk.

- Identify material changes to the company’s risk profile.

This structure can enhance the environment for identifying and

capitalizing on opportunities to create value. The board should establish the

risk profile.

The principle recommendation is that “the board should establish

policies on risk oversight and management”. This boil-down to establishing

risk management policy, risk management rests with the full board. The

second recommendation holds that “the Chief executive officer (or

equivalent) and the chief financial officer (or equivalent) should state to the

board in writing that the statement given in accordance with section 295A of

the corporations Act is founded on a sound system of risk management and

internal control which implements the policies adopted by the board in

relation to financial reporting risks and that the system is operating

effectively in all material respects.

The third recommendation recast that “the chief executive officer (or

equivalent) and other responsibility for assessing the effectiveness of its

systems with respect to material business risks which are not covered by

recommendation of the second above. It may be appropriate in the

company’s circumstances for the board to make additional inquiries and to

request additional senior executives to sign off on its other material business

risks. And the companies should provide the information indicated in the

guide to reporting on principle 7.

The principle note it worthy that principle 8 was combined with the

principles 1 and 2 earlier treated.

Principle 9:

REMUNERATE FAIRLY AND RESPONSIBLY:

Companies should ensure that the level and composition of

remuneration is sufficient and reasonable and that its relationship to

performance is focus for investors. When setting the level and structure of

remuneration, a company needs to balance its desire to attract and retain

senior executives and directors against its interest in not paying excessive

remuneration. It is important that there be a clear relationship between

performance and remuneration, and that the policy underlying executive

remuneration be understood by investors.

Though, the remuneration requires “the board to establish a

remuneration committee”. Their purpose, charter, composition,

responsibilities, remuneration policy etc”. The guidelines for executive

remuneration packages are viz (fixed remuneration, performance-based,

equity-based and termination, payments). The second recommendation calls

that the “companies should clearly distinguish the structure of non-

executives”. The senior executives remuneration packages should involve a

balance between fixed and incentive pay, reflecting short and long-term

performance objectives appropriate to the company’s circumstances and

goals.

The third and fourth recommendations stipulates that “the companies

should ensure that payment of equity-based executive remuneration is made

in accordance with thresholds set in plans approved by shareholders, and

companies should provide the information indicated in the guide to reporting

on principle 9.

All the stipulated and articulated facts of this principles is to bring

about the efficient and effective governance in organization.

2.6 THE PRINCIPLES OF GOOD CORPORATE GOVERNANCE

FOR LISTED COMPANIES:

The stock exchange of Thailand (2006:1), defines corporate

governance as a set of structures and processes of the relationships between

a company’s board of directors, its management and its shareholders to

boost the company’s competitiveness, its growth and long-term shareholder

value with taking into account the interests of other company stakeholders.

The principles of good corporate governance are in line with the philosophy

of sufficiency economy initiated by His Majesty the king to ensure

sustainable development. The philosophy of sufficiency economy

emphasizes equilibrium and flexibility together with careful, thorough, and

moral application of knowledge. Good corporate governance is an essential

character of listed companies. It means that the company has efficient,

transparent, and able to be audited management systems that create trust and

confidence amongst its shareholders, investors, other stakeholders and all

relevant parties. Good corporate governance is a means to add a firm’s value

and to sustain its growth.

The principles of Good Corporate Governance for Listed Companies,

revised in 2006, are divided into two parts, the principles and the

recommended best practices. Nonetheless, this document does not include

the issues concerning corporate governance that have already been specified

in relevant laws and regulations. The principles and the recommended best

practices are presented in 5 categories namely.

1 Right of Shareholders

2 Equitable Treatments of Shareholders

3 Roles of Stakeholders

4 Disclosures and Transparency

5 Responsibilities of the Board

The principles cover all-important issues concerning good corporate

governance whilst the content in the recommended best practices offers

supplementary descriptions or means to enable companies to implement the

principles.

LISTED COMPANIES AND THE PRINCIPLES OF GOOD

CORPORATE GOVERNANCE

1. Comply or Explain

The Stock Exchange of Thailand recommends that the boards

of directors and management teams of listed companies comply with

the principles to improve their systems of corporate governance to be

internationally comparable. The principles can be adapted by each

company to best fit the individual company’s functional needs. If they

choose not to comply with any principles, they should explain

thoroughly the reason for not doing so.

2. Disclose the Implementation

Shareholders, investors, other stakeholders and relevant parties

expect that listed companies disclose their implementation of the

principles, whether they are strictly complied with or adaptations have

been made. In cases they choose not to comply or adapt, they are

expected to thoroughly explain their reasons for not doing so. Listed

companies have been requested to start disclosing their

implementation of the principles in their Annual Statement and their

annual reports.

In addition, listed companies should disclose the

implementation of he principles of good corporate governance via

other channels that they find to be the most convenient means for their

shareholders, investors, other stakeholders and relevant parties. One

suggested channel is a company’s website.

1. RIGHTS OF SHAREHOLDERS

Principles

Shareholders are the owners of the company. They control the

company by appointing the broad or directors to act as their representatives.

Shareholders are eligible to make decisions on any of significant corporate

changes. Therefore, the company should encourage shareholders to exercise

their rights.

Basic shareholder rights are right to 1) buy, sell, or transfer shares 2)

share in the profit of he company 3) obtain relevant and adequate

information on the company in a timely manner and on a regular basis 4)

participate and vote in the shareholder meetings to elect or remove members

of eh board, appoint the external auditor, and make decisions on any

transaction that affect the company such as dividends payment, amendments

to the company’s articles of association or the company’s bylaws, capital

increases or decreases, and the approval of extraordinary transactions, etc.

Shareholders should be fully informed of the criteria and procedures

governing shareholders meetings. Sufficient information regarding the issues

to be decided in each agenda item should be provided in advance of the

meeting. Shareholders should be able to query directors both in the meeting

and by sending their questions in advance. They should also be allowed to

propose an agenda item and vote by proxy.

The board o directors must recognize shareholders rights and avoid

actions that violate those rights.

RECOMMENDED BEST PRACTICES

1. The board of directors should include in the corporate governance

policy of the company, at a minimum but are not limited to, all the

statutory rights of shareholders.

2. The board of directors has the duty to make sure that the company

provides shareholders, in advance of meetings, with the information on

the date, time, venue, and all agenda items with complete support data.

The board should also inform shareholders of the criteria and

procedures governing the company’s web site before sending out the

notice of the meetings so that shareholders can study all information

prior to receiving the notice.

3. Any action that can be considered in violation of the shareholder’s right

to study the company’s information should be prohibited.

4. The board of directors should facilitate shareholder’s participation and

voting in meetings. Any action that can be considered in violation of

their right to attend the meeting should be prohibited. For example,

procedures to attend and vote in the meeting should not be complicated

or costly for shareholders.

5. The chairman of the meeting should allocate appropriate time for

discussion and encourage shareholders to express their opinions and ask

questions related to the company’s operation. Shareholders should also

be able to send their questions to the company prior to the meeting date.

6. All directors should attend shareholders meetings. Shareholders can

ask relevant questions directly to the chairpersons of the committees

responsible for any specific issues.

II EQUITABLE TREATMENT OF SHAREHOLDERS

Principles

All shareholders, including those with management positions, non-

executive shareholders and foreign shareholders should be treated in an

equal way. Minority shareholders whose rights have been violated should be

redressed.

An important factor of shareholders who invest in a company is that

they can trust that the company’s board of directors and management use

their money appropriately. The board of directors should ensure that all

shareholders rights are protected and that they all get fair treatment.

The board of directors should ensure that all processes and procedures

for shareholders meetings allow equitable treatment of all shareholders.

There should be a clear procedure to allow minority shareholders to

nominate candidates for director positions. Shareholders who cannot vote in

person should be allowed to vote by proxy.

The board should set procedures to prevent the use of inside

information for abusive self-dealing such as insider trading or related party

transactions.

All directors and executives should be requested to disclose to the

board whether they and their related parties have any interest in any

transaction or matter directly affecting the company. Directors and

executives who have such interests should not participate in the decision-

making process on such issues.

RECOMMENDED BEST PRACTICES

1. The Board of directors should facilitate minority shareholders to

propose, in advance of the meeting dates, any issues for consideration

in shareholders meetings.

2. The board of directors should have pre-determined criteria on

screening the issues proposed by minority shareholders.

3. Shareholders with management positions should not add any agenda

items without notifying other shareholders in advance, especially if it

is an issue that will require shareholders to spend a good deal of time

to study relevant information before making their decisions.

4. the board of directors establish procedures for the nomination of

candidates by minority shareholders. One alternative is to nominate

via the company’s nomination committee during a period 3-4 months

prior to the meeting date. Support information, candidates

qualifications and their consent, should be provided by minority

shareholders who nominate the candidates.

5. the board of directors should encourage the use of proxy forms on

which shareholders are able to specify their votes. The board should

provide an option to shareholders whereby they may appoint an

independent directors as their proxy.

6. for the sake of transparency and future reference, the board of

directors should encourage the use of voting cards for important

agenda items such as related party transactions, acquisitions or

disposal of significant assets etc.

7. directors election should utilize a process in which shareholders are

able to vote on individual nominees.

8. there should be written procedures concerning the use and protection

of inside information. The board of directors should establish the

above mentioned procedures and communicate them to everyone in

the company. Every director and executive should regularly submit to

the board a report on their ownership of the company’s shares.

111. Role of Stakeholders

stakeholders of a company should be treated fairly in accordance with

their legal rights as specified in relevant laws. The board of directors

should provide a mechanism to promote cooperation between the

company and its stakeholder in order to create wealth, financial

stability and sustainability of the firm.

Stakeholders in corporate governance include, but are not limited to,

customers, employees, suppliers, shareholders, investors, creditors, the

community the company operates in, society the government competitors

external auditors etc.

The board of directors should set a clear policy on fair treatment for

each and every stakeholder. The rights of stakeholders that are established

by law or through mutual agreement are to be respected. Any actions that

can be considered in violation of stakeholders legal rights should be

prohibited. Any violation should be effectively redressed.

The board of directors should provide a mechanism that stakeholders

can involve in improving the company performance to ensure the firm’s

sustainability. In order for stakeholders to participate effectively, all relevant

information should be disclosed to them.

There should be an effective way for stakeholders to communicate to

the board any concerns about illegal or unethical practices, incorrect

financial reporting, insufficient internal control etc. the rights of any person

who communicates such concerns should be respected.

The board of directors should set clear policies on environmental and

social issues.

Recommended Best Practices

1. The board of directors should identify each group of stakeholders as

well as their legal rights

2. the board of directors should have clear procedures regarding the

communication of any concerns from stakeholders to the board. One

channel is via independent directors or the audit committee who

should arrange an investigation and report to the board.

3. To set the policies on environmental and social issues to ensure that

the company contributes to sustainable development, the board of

directors should consider all the issues that directly affecting the

operation.

IV. Disclosure and Transparency

Principles

The board of directors should ensure that all important information

relevant to the company, both financial and non-financial, is disclosed

correctly, accurately, on a timely basis and transparently through easy-

to-access channels that are fair and trustworthy.

Important company information includes financial reports and non-

financial information specified in the regulations of the Securities and

Exchange Commission (Sec) and the Stock Exchange of Thailand (SET) as

well as any other relevant information such as the summary of the tasks of

the board of directors and its committees during the year, corporate

governance policy environmental and social policies and the company’s

compliance with the above-mentioned policies, etc.

The quality of a company’s financial reports is vital for shareholders

and outsiders to make investment decisions. The board of directors should

be confident that all information presented in the financial reports is correct,

in accordance with generally accepted accounting principles and standards,

has been audited by an independent extremely auditor.

The chairman of the board and the managing director (MD or CEO)

are in the best position to be spokespeople for the company. Nonetheless, the

board of directors may appoint another director or executive to acts as

spokesperson. That person should perform the duty with due care, in

addition, the board of directors should designate a person or a department to

perform the “the investors relations” function to communicate with

outsiders such as shareholders, institutional investors, individual investors,

analyze the related government agencies, etc.

RECOMMENDED BEST PRACTICES

1. In addition to disclosing information as specified in relevant

regulations through the channel of the SET, annual statements (Form

56-1), and annual reports, the board of directors should disclose

information, both in Thai and English, via other channels such as the

company’s web site. All disclosed information should be to-date

2. The board of directors should provide a summary of the corporate

governance policy approved by the board together with the

implementation of the policy through various channels such as the

company’s annual reports and web site. If the board has approved

policies on environmental and social issues, theses policies should

also be disclose together with the implementation.

3. The board of directors should provide a statement of its

responsibilities concerning the company’s financial reports. The

statement should be presented along side the auditor report in the

company’s annual report.

4. The board of directors provide a statement of its responsibilities

together with those of its committees are disclosed. The number of

meetings and attendance of each director as well as the results of tasks

performed during the year should also be reported to shareholders.

4. The board of directors, in addition to the disclosure of its

remunerations according to related regulations, should also disclose

the director’s and executives’ remuneration polities that correspond to

the contribution and responsibilities or each person. Also, the board

should disclose the form and the amount of payment. If any director

of the company’s is also director of its subsidiaries, the amount

representing the director’s fee paid by the subsidiaries, the amount

representing the directors’ fee paid by the subsidiaries should b e

disclosed as well.

RESPONSIBILITIES OF THE BOARD

Principles

The board of directors plays an important role in corporate governance for

the best interest of the company. The board is accountable to shareholders

and independent of management.

The board of directors should have leadership, vision, and

independence in making decisions for the best interest of the company and

all shareholders. The board should clearly separate its roles and

responsibilities from those of management and monitor the company’s

operations to ensure all activities are conducted in accordance with relevant

laws and ethical standards.

The structure of the board should consist of directors with various

qualifications, which are skills, experience, and expertise that are useful to

the company. Directors should commit to their responsibilities and put all

efforts to create a strong board of directors.

The directors nomination process should be transparent, without any

influence of controlling shareholders or management, and be credible to

outsiders.

For efficiency and effectiveness, the board of directors should set

committees to study and screen special tasks on behalf of the board,

especially issues that need unbiased opinions. Committee should have a

clear scope of their work, roles and responsibilities as well as the working

procedures such as meetings and reporting to the board.

All directors should understand their roles and responsibilities and the

nature of the company’s business. They should be ready to express their

ideas independently and always update themselves. Directors should

perform their duties in good faith, with due diligence and care, in the best

interest of the company and all shareholders. In order for directors to

perform their duties, they should receive correct and complete information.

They should commit themselves to their responsibilities and attend all board

meetings, except for reasonable excuse.

The board of directors should not approve its own remuneration. The

process of setting their remuneration should be transparent. Shareholders

should approve director’s remuneration. The level and composition of

remuneration should be appropriate and high enough to keep qualified

directors but not overpaid.

RECOMMENDATION BEST PRACTICES

1. Board Structure

The board of directors, with approval from shareholder meeting, should

set an appropriate number of its members and composition. There should be

a number of independent directors equivalent to at least one-third of the

board size, but not less than 3. The remaining directors on the board should

be proportionate to the ownership of each group.

Term of service of directors should be clearly stated in the company’s

corporate governance policy.

The company’s definition of independent directors should be carefully

considered by the board of directors whether or not the minimum

qualification specified by the SEC and the SET is appropriate for the

company. The board may use stricter definition of independent directors

than the minimum requirement.

Directors of a company who serve on too many boards may not be able to

perform their duties effectively. The board of directors may review the

effectiveness of directors with multiple board memberships or limit the

number of board positions that a director can hold. The company should

disclose the information about board membership positions of individual

directors to shareholders.

The board of directors should clearly state the policies and procedures

regarding board positions in other firms held by he company’s managing

director and top executives, both in terms of director type (ie executive,

outside, or independent) and the number of board positions that can be held.

For example, the board may state that any board position held in other firms

by the company’s managing director must be approved by the board.

The roles and responsibilities of the board are different from those of the

managing director. The board should separate the roles and responsibilities

of both positions. In order to achieve a balance of power, the two positions

should be held by different individuals.

The chairman of the board should be an independent director.

The function of the company secretary should be in place to serve the

board of directors in areas of providing legal advice, taking care of the

board’s activities, and monitoring compliance to the board’s resolutions.

2. Committees

Audit committee is required by the SET listing rules. There are two other

recommended committees namely eth remuneration nad nomination

committees.

Remuneration Committee is responsible for setting the critieria

and the form of payment to directors and top executives and

presenting the results to the board. Whilst the board approves

executives’ remuneration, the shareholders approve that of

directors.

Nomination Committee is responsible for setting the criteria and

process of nominating board member and top executives,

selecting qualified candidates according to the pre-determined

criteria and process, and presenting the result to the board. Then,

the board will present the results at the shareholders’ meeting for

election.

For the committees to perform their duties transparently and

independently, the majority of the committee members should be

independent directors. The chairman of each committee should be an

independent director.

The chairman of the board should not be either a chairman or a member

of any committee to ensure independence of the committees.

3. Roles and Responsibilities of the Board

The board of directors should review and approve key business matters

such as the vision and mission of the company, strategy, financial targets,

risks, major plans of action and budget. The board should also monitor

implementation by management to ensure efficiency and effectiveness.

The board of directors should set and approve a written corporate

governance policy for the company and review the policy and compliance to

the policy regularly, at least annually.

The board of directors should ensure that a written code of business

conduct be in place so that all directors, executives and employees

understand business ethical standards of the company. Compliance to the

code should be closely monitored by the board.

The board of directors should consider any conflict of interests

thoroughly. There should be a clear guideline on the approval of transactions

with conflict of interests so that the transactions are conducted for the best

interest of the company and all shareholders. The person who has interest of

the company and all shareholders. The person who has interest in the

transactions should not participate in decision-making process. The board

should also monitor compliance to the regulations regarding criteria,

procedures and disclosure of transactions with conflict of interests.

The board of directors should ensure that internal control system is in

place, including financial, compliance, and policy control, and review the

system at least annually. The board should also assign a person or a

department to independently audit and report on the system.

The board of directors should establish a risk management policy to

cover all activities of the company, assign management to implement the

policy and request a report from management regularly. The board should

review the risk management system or assess the effectiveness of risk

management at least annually and whenever there is a change in risk level.

The board should also focus on early warning signs and unusual

transactions.

4. Board Meetings

The board of directors should set its meeting schedule in advance and

notify each director of the schedule so that each member of the board can

manage time to attend the meetings.

The number of board meetings should be appropriate to the obligations

and responsibilities of the board and nature of the company. If the meetings

are not monthly, the board should receive a monthly report on the

company’s performance so that it can monitor management performance

continuously and promptly.

The chairman of the board and the managing director should set the

board meeting agenda together and ensure that all important issues are

already included. Each member of the board should b e free to propose an

issue for a meeting agenda.

Meeting documents should be sent to each director in advance of the

meeting date. The document should be concise, with all relevant

information. Any confidential issues should be brought to discuss during the

meeting.

The chairman of the board should appropriately allocate the meeting time

for complete management’s presentation and comprehensive directors’

discussion. The chairman should encourage careful consideration in the

meeting. Every director should pay attention to each issue presented in the

meeting, including issues concerning governance of the company.

Top executives of he company, other than the managing director, should

be able to attend the board meeting to present details on the issues that they

are directly responsible for. The board will have a chance to know more

about top executives and be able to prepare a succession plan.

The board should have access to additional information, under a

prearranged condition, via the managing director, the company secretary or

the executive designated as a contact person.

PART OF CHAPTER TWO

5.Board self Assessment

Board self assessment should be conducted regularly to allow all

members of the board to consider the board’s performance and solve any

problems they may have. A benchmark of the board’s performance should

be systematically set in advance.

Members of the board should assess the performance of the board as a

whole or specifically to the issues, not to any director. The board should be

careful if board self assessment is on individual basis. Though possible, it is

a sensitive issue.

6. Remuneration

Board remuneration should be comparable to the industry level in which

the company operates, reflect experience, obligations, scope of work,

accountability and responsibilities and contributions of each director.

Members of the board who are assigned to more tasks, such as committees,

should be paid more.

Remuneration of the managing director and top executives should be in

accordance with the policy of the board, within the limit approved by

shareholders. For the best interest of the company, executives’ salaries,

bonuses, and other long-term compensation should correspond to the

company’s performance and that of each executive.

All non-executive directors or the remuneration committee should

appraise the performance of the managing director annually to set his/her

compensation. The basis of the appraisal should be agreed upon by the

managing director ahead of the evaluation. The criteria should be objective,

including financial performance, long-term strategic performance, career

development plan, etc. The results of appraisal should be presented to the

board for approval. The chairman of the board or a senior director should

communication the evaluation results to the managing director.

7. Board and Management Training

The board should encourage and facilitate training for all internal parties

related to corporate governance such as directors, members of the audit

committee, executives, company secretary etc. Training will enable them to

continuosly improve their performances. It can be either internal or external

training.

New directors should be provided with all documents and information

useful to perform their duties. Introduction to the nature of the business and

the operations of the company is necessary.

The board should request the managing director to present them the

succession plan on a regular basis. The managing director and top

executives should assign successors in case they cannot perform their

duties.

The board should establish a development program for executive . The

managing director should report to the board annually about the program.

The board should take into account the executive development when

considering the succession plan.

2:7: REGULATIONS OF CORPORATE GOVERNNANCE

In the enforcement of corporate governance in Nigerian listed

companies and even banks occurs in two distinct approaches viz-

i) Self-induced regulation

ii) Statutory regulation

White discussing regulation, reference will be made to compliance to

the forms and substance of corporate governance (ABSA, 2004). The

forms of corporate governance is synonymous with the letters of the law,

while the substance of corporate governance is similar to the spirit of the

law. When corporate governance is self –induced or internally motivated

the boards lays greater emphasis on ensuring compliance with the

substance of governance. At any given time, the substance of corporate

governance is complied with them the form is complied with as well but

not vice versa.

This preface will usher us to the discussion of two types of regulation

and the role of the regulatory authorities in the institutionalization of

corporate governance:

1. Self-induced Regulation:

This is a bid to maintain the substance of corporate governance by the

board who by its composition, decisions, strategies, polices and

operations ensure that the banks are properly managed and adequate

information and return renditions made to the stake holders. The

board makes policies that abides with the code, not necessarily

because the law requires them to do so but because it deems it fair and

just to do that. In the period of post consolidation for banks in Nigeria,

it is very unlikely that banks will enthrone the rule of corporate

governance if the statutory regulations are not augmented by the self –

induced regulation.

Afolabi (2006) on self regulation says, “ self regulation and self

discipline are likely to be more effective than regulation by

government agencies because it is based on self conviction”

Nevertheless, self regulation does not and should not eliminate the

regulatory controls and supervisions of the regulatory authorities.

Chizea (2006) noting the merit of self-regulation said that “when good

governance becomes the order of the day amongst banks, the job of

banking supervision is made very easy” this still emphasized the need

for harmonizing the externally induced regulation with the self-

induced regulation. Finally self regulation requires probity

transparency and accountability.

2. Statutory regulation

Much greater challenges of breaking Nigeria away from the list

countries no torious for prevalence of weak corporate governance and

poor controls lies heavily on the aim of the regulatory authorities.

Highlighting relevant facilities –legislation and cohesive apparatuses

can surmount these challenges. Over the years in the banking industry

a lot have been done in area of statutory regulations from 1952 till

date. Eventually as early the pre-independence period, the first

banking regulation was introduced to arrest the embrassing crises in

the industry.

This regulation marked the first banking ordinance. Since then, it has

passed through series of amendments and modification and it has

metamorphosed to what we have today as bank and other financial

institution Act (BOFIA or BOFID) 1999 as amended. Others are

failed banks Act of 1994 company and allied matters decree 1999 as

amended Nigerian deposit insurance corporation (NDIC) Act,

prudential guidelines of CBN, CBN circulars and the code of

corporate governance in Nigeria for banks in the post consolidation

regime. So many sections of these laws provided for ethical practices

in the industry, and the management of banks and other corporation.

Towards the reformation agenda pronouncement, the regulatory and

government agencies have very vital role to play in ensuring that the

companies in the country acquire better understanding of the need to

exert good corporate governance in their business. Over the years a lot

of government regulatory institutions have been instituted to monitor

and control a segment of business in Nigeria. Many policies, rules and

regulations, guidelines and codes have been embibed and incubated

by these government agencies. Some of them are corporate Affairs

commission (CAC), the Nigerian Stock Exchange (NSE) the

securities and exchange commission (SEC) the central bank of

Nigeria (CBN), Nigeria deposit insurance corporation (NDIC), the

APC and IST should be strengthened to function effectively especially

as regards increasing substantially the penalty for non-compliance.

Again, substantial judicial reforms to enable, speedy

determination of commercial cases. Ands amend the provisions of

section 314 and 330 of CAMA and strengthen the capacity of CAC to

enable it improve its power of investigation into the affairs of

companies.

REFERENCES

Hurst, J.W (1970), The Legitimacy of the Business Corporation;

Charlottesville; University Press of Virginia

Formoy, R.R (1923) The Historical Foundations of Company Law, London;

Sweet and Maxwell

Van Den Berghe, L and De Ridder L (1999) International Standardization of

Good Corporate Governance, Boston; Kluwer Academic

Publishers.

Mc Queen, R (1991) Limited Liability Corporate Legislation; The

Australian Experience, Australian J of Corp L, 22

Farrar, J.H and Hannigan, B (1998) Farrar’s company law; London;

BUttenworths,

Easterbrook, F.H and Fishchel D.R (1991) The Economic structure of

corporate law, Cambridge Mass Harvard University press.

Van den Berghe, L and De Ridder L (1997) Institutional Investors and

Corporate governance, Chicago; trwin press.

Johnson, G and Scholes, K(1998) exploring corporate strategy; A report.

Hampel committee report 1998.

The Turnbul Report 1999

CIPFA/SOLACE (2001) Corporate Governance in Local Government; A

keystone for community governance.

ALARIm (2001) A key to success: A guide to understanding and managing

risks (www.alarm-uk .com).

Institute of Risk Management (IRM) 2001

Marco, B. Bolton P. and Roell A. (2004) Corporate Governance and control;

ECGI. Finance working paper No. 02/2002.

Udorna, U.U (2008)Keynote Address Presented at the 2008 Annual

Conference of the Institute of chartered secretaries and

Administrators of Nigerian (ICSAN) available at

http://www.sec.gov.ng/theme/default/pdf/publications

Asx corporate Governance Council (2006) Principles of good corporate

governance and Good Practice Recommendations; Exposure

Draft of changes Nov. 2006. available at www.asx.com.au

The Stock Exchange of Thailand (2006) The principled of Good Corporate

Governance for listed companies; Corporate governance

center.

ABSA Bank Group Annual Financial Report 2004.

Afolabi (2006) Implication of Consolidation on Banking Sector 111,

available at www.thetidenews.com

Chizea, B (2006) Code of corporate governance, this day Jan 23.

Turnbull, S. (1997) Corporate Governance: Its scope concerns and theories,

corporate governance: an International Review, Blackwood

Oxford vol 5.

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research methodology outlined the processes or the procedures a

researcher adopted in evaluating a given piece of work or study (Aneke,

1998). It X-rays the procedures adopted in the data generation, data

collection, measurement and the basis upon which influence is made on the

population. These procedures made in this research quite scientist testable

and investigative.

However, this research is designed to evaluate the reflection of

corporate governance in regulation, commitment and compliance in the

wealth distribution among the shareholders, employees, government and

rendition over the period of (2000-2005) among the selected Nigerian listed

companies. It empirically try to establish the fairness, transparency and

accountability or otherwise of values given to shareholders of Nigerian listed

companies.

3.2 METHODS OF DATA COLLECTION

The data collection method adopted for this study includes the

extraction and collection of data from the value added statements of the

company’s annual reports. If further involved the critical review of financial

statement of the sampled companies for the period of (2000-2005) under

review. This method is designed to gather both time series and cross-

sectional data.

Aneke (1998) defines times series data as the data that cuts across the period

under study and cross-sectional data as the data that cuts across industries.

All these are secondary data collection approach.

3.3 SOURCES OF DATA COLLECTION

This study heavily relied on data source from the secondary source.

The choice of secondary source is to eliminate bias that characterized

primary data source.

Ikeagwu (1998) referred secondary data as data collected from secondary

sources which are works of other people and bears on the subject matter of

the study. The secondary data used were accurately presented without

manipulations and sources appropriately disclosed for further enquiry. Such

data is meaningful when it is objectively reported to represent a rue situation

(Aneke, 1998).

Therefore, all the data used for the analysis were sourced from the

annual reports of the selected companies. The researcher used data from the

company’s valued added statement (VAS) instead of the group VAS. Group

Vas were sparingly used when minority interest is quite insignificant to

affect the result. And interview using the trained research questions.

3.4 SAMPLE SIZE DETERMINATION

The researcher through random stratified sampling measure designate

to each of the six (6) listed industry sector 10 units of the population to

represent their strata. Thus, the total sample 280 respondents were picked

and interviewed based on the 5 (five) trained questions.

However, the formula of Yamane of known population were used to

determine the sample size for the research question in presentation viz:-

N = N 17N(e)2

Where n = sample size

N = Finite population

E = Limit of tolerable error

I = Constant

N = 280

E = 5% pr 0.05

Substituting = 280 17280(0.05) 2

N = 164.7

N = 165

3.5: POPULATION AND SAMPLE OF THE STUDY

Studying the entire population would rather be a Herculean task when

carrying out a study on a a subject matter such as this. Therefore, in order to

make a logical inference about the population, a research sample were

designed to cover a wide companied covered are “Banking, Insurance,

conglomerates, food and Beverages, Breweries and petroleum.

This research adopted non-probability sampling methods which does

not choose sample subject at random (Aneke, 1998). Further, judgmental

approach were used in choosing he samples. However, judgmental approach

is known for inherent biases but then a clear sampling procedure for samples

selection were designed to minimize and to eliminate sampling biases and

errors where they exist.

3.6 METHOD OF DATA PRESENTATION AND ANALYSIS.

The collected data were analyzed simply by the computation of

averages in percentages of values given to various shareholders over the

years. While corrupting the averages, exceptional values (extreme and

unusual values) were eliminated so as not to affect the overall result of the

corruption. Annual industrial averages were corrupted on the values

extracted from the value added statements of the companies under study.

The industrial averages were the basis for comparisms across the industries.

Another important mean used in this analysis is the periods industrial

average. This is the mean of the industrial averages of the value given to

different stakeholders over the period of (2000-2005) years under study. The

formula used were viz:-

Annnual Industrial: Sum of companies averages Averages :- Number of companies in the industry

Periodic Industrial Average

Sum of companies average for the period (2000-2005) Number of companies in the Industry for the period (2000-2005)

While inferential statistical method were used in summarizing and

concluding on the subject mater. Inferential statistics according to Asika

(1991) is a modern approach that is concerned with making generalization

from the study of a sampling. And the sample research question will be

presented with frequency percentage table.

REFERENCES

Aneke O.E (1998) Introduction to Academic Research Method; Enugu;

Gostak printing and publishing co Ltd

Asika, N (1991) Research Methodology in Behavioral Science, Lagos:

Longman Nigeria Plc

Ikeagwu, E.K (1998) Groundwork of Research Methods and Procedure,

Enugu: IDS UNEC

CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

Data presented below were extracted from the bank’s and listed

companies value added statement for the period of six years (2000-2005),

the remaining data were collected using the research questions to conduct

population. Computations based on the extracted data were tabulated.

Analyzed in this segment were based on the corrupted percentages and

means. As much as possible, naira values were avoided completely in the

analysis. Also the total values given to different stakeholders summoned up

to 100%

4.2 DATA PRESENTATION

Table: Value Added Statements of Banks for 2000-2005: (see the Extract)

Table 2: Value Added Statements of “Insurance companies for 2000-2005

(see the Extract)

Table 3: Value Added statements of ‘Conglomerates for 2000-2005 (see the

Extract)

Table 4: value added statements of “Breweries” for 2000-2005 (see the

Extract)

Table 5: Value Added Statements of “Petroleum” for 2000-2005 (see the

Extract).

Table 6: Value Added Statements of “Food and Beverages” for 2000-2005

(see the Extract)

4.3 DATA ANALYSIS

In analyzing the key research question in this study, percentages,

industrial averages, periodic industrial averages were used mainly on

question 5 of this research. As much as possible, whole figures would be

avoided because they do not provide common basis for comparisms.

Research Question 5: How Realistic is the Equitability of the returns to

shareholders of Nigeria listed companies over the years.

The return of the shareholders can come inform of outright dividend

distribution and or transfers to shareholders fund inform of reserve. The

fairness and otherwise of values given to shareholders of banks can be

established if the value given to them is comparatively analyzed in relation

to the values given to shareholders of other companies in different industries

and the likes. Furthermore, the equity in the returns given to then will be

ascertained if compared with the values give to other stakeholders

(employees, government, and debt capital providers) in the banking and non-

banking sector alike.

Table 7:- Computation of Industrial Averages and Periodic Industrial

Averages of Dividend Values Given to shareholders:- (see the attached

Extract)

The above table represents the relationship between the values shareholders

of different industries receives over the period under study in form of

dividend. Because shareholders committed risk capital or equity, CAMA

section 379 recognized the right of shareholders to dividend and residual

assets on liquidation i.e remaining assets after settling secured creditors

employees and government. This section of analysis will concentrate on the

returns to shareholder in forms of dividend respectively.

From the table above, banks shareholders received dividend within the

range of 11 – 16.13% between 2000-2005. this leaves the industry with

periodic industrial average of 13.99% for the six year period. This is quite

below the percentage of values given to shareholders of other industries. The

range of average returns of fellow financial institution (insurance industry) is

between 19.8% - 33.6% with a periodic average of 23.8%. insurance

industry is a fellow financial institution so one may expect closeness in the

means of returns to the shareholders of banks.

Unfortunately, there is a wide gap between the averages of the five

financial industries. An attempt will be made to explain the reason for the

wide gap in the second segment of our analysis. Conglomerates gave back

average value in the range of 14.1% to 18.0% with a periodic industrial

average of 16.3%. breweries, food and beverages and petroleum industries

given to bank shareholders was the least among the industries under study.

From the analysis above, the study may conclude that Nigerian listed

companies have not done well in terms of dividend payout. But then,

dividend payout alone will not form a conclusive evidence to ascertain the

fairness or the equitable treatment of shareholders.

In order to establish the fairness or otherwise of value given to

shareholders of Nigerian listed companies, a comparative analysis of

returned (dividends and retentions) to shareholders will be carried out in the

next table.

Table 8: Presentation of total returns (dividends and retained wealth) to

shareholders (see attached extract).

From the table above, it indicates that dividend payout and retained wealth

correlate, inversely. That is, an upward dividends paid out may likely cause

a downward movement in the value retained for the future business

development. The implication is that returns to shareholders not paid out as

dividend would be retained for business expansion or for future use. It is

quite evident in the table that industries in the financial sector retained he

highest volume of wealth, followed by the banking industry with average

retained wealth of 19.2% for the period of 6 years under study. While the

periodic industrial averages of retained wealth for conglomerates, breweries,

food and beverages and petroleum stood at 9.4%, 8.1%, 11.7% respectively.

The table further shows that only banking industry retained more

values than dividend payout. The periodic industrial averages of dividend

payour for banks stood at 13.9% while the periodic industrial average of

retentions is 19.2%. the relationship between dividends distribution and

retentions for business expansion suggested the dividend policy adopted by

the industry. The dividend policy that is common among banks is residual

dividend policy.

According to Aborede (2005) residual dividend is a policy where

organization keep back substantial part of their earnings for financing

projects or for business expansion instead of relying on external financing.

In this policy also, retention is prioritized over dividend.

To conclude on the fairness of the values given to shareholders we have to

look at the composite growth of returns to shareholders based on dividend

payouts and retentions. The reason being that all appropriations after tax in

profit and loss accounts belongs to the owners of the business. Finally the

fairness will be further clarified by aggregating all transfers or

appropriations after tax.

Table 9: Presentation of Aggregate Returns to shareholders (extracted from

table 8 above

Industry Total Returns %

Banking 33.1

Insurance 43.6

Conglomerate 25.7

Breweries 28.7

Food and Beverages 27.9

Petroleum 37.9

Table 9 above presents the total returns given to shareholders in form of

dividend and retentions for business growth. These aggregate values are the

sum of the periodic industries averages of dividend and retained wealth.

From the above table financial institutions ranked first (insurance) and third

(banking) among the six sector gave the highest return to the tune of 43.6%

while the banking sector came third in the list with 33.1% of the values

given to shareholders. Although, one may argue that the financial sector has

done well, yet the gap between the insurance and banking is so wide that it

cannot be neglected (Margin 10.5%) in action plans of the organization.

Table 10: Presentation of industrial and periodic industrial average value

given to all the stakeholders:- (see the extract).

All the stakeholders in the business have varied contributions and as such

deserved varied returns from the earnings of the business. Shareholders

commit risk capital in form of equity to the business and by so doing they

are the owners of the business.

From the above table, banks gives highest value to their employees for

periodic industrial average return of 39.2% is given to their employees for

converting the resources available to income. Insurance and food and

beverages gave equal values to the employees to the tune of 37.6% while the

periodic industrial averages for conglomerate petroleum and Breweries

stood at 35.9%, 27.8% and 18.4% respectively.

Hence, government levied more on the Breweries by charging more tax and

excise duty. The high charge on the profit of the breweries accounted to the

lower values given to shareholders and employees. The periodic industrial

average of the values given to the government stood at 40.3% where the

closest industry that paid higher tax was petroleum that gave 20.2% of the

total value generated to the government. Banks, insurance, conglomerate and

food and beverages gave 11.7%, 7.1%, 10.1% and 11.7% respectively to

government as tax.

The debt capital providers have a share to the wealth generated by the

organization. In compensation for their capital they receive interest. In our

analysis, all the companies selected for case study borrowed interest yielding

capital with the exception of financial institutions. Conglomerates led by

returning 12.3% of value generated to debt capital providers while food and

beverages, Breweries and petroleum returned 10.7%, 3.4% and 2.8%

respectively. The implication of the above we that value saved by the

financial institutions for not paying interest was made available to other

stakeholders for distribution.

From our computation above, petroleum industry gave a total return of

37.9% to the shareholders which is 4.8% greater than he values given to

shareholders of banks. Furthermore, considering the fact that petroleum paid

20.2% in tax and 2.8% in interest where banks paid 11.7% in tax and

nothing in interest, it is expected that banks will give more value to the

shareholders. From our analysis also, industries that gave lesser values to

their shareholders gave more values to government and to interest capital

providers.

4.4 GENERAL DATA ANALYSIS

The remaining research questions outside returned from value added

statement was analyzed using percentage to with the sample size determined

in the methodology.

Table 11 Research Question 1: How is the good corporate governance

practice be practilized by your firms in balancing of stakeholders

interest? Table11

Option Respondent Percentage

a. through adequate auditions.

b. Through proper risk

management

c. through

information

transparency

d. Proper sense of shared

values and accountability

e. Through well targeted

regulatory frame work

f. All of the above 165 100

g. None of the above -

Total 165 100%

The table 11 above unanimously agreed that the good corporate governance

practice preserves or practicalized balancing of the stakeholders interest

through adequate auditing, proper risk management, information,

transparency, proper sense of shared values and accountability well targeted

regulatory framework etc by the firms.

Table 12: Research Question: To what extent is fairness, transparency and

accountability operationaled in returns given to shareholders as recommend

by the principles?

Option Respondent Percentage

a. Poor 40 24.2

b. Fair 75 45.4

c. Good 30 18.1

d. Excellent 20 12.1

Total 165 100%

Source: Field Survey, 2009

From the above table indicated that 40 (24.2%) of the respondents said the

extent of fairness. Transparency and accountability is poor, 75 (45.4%) said

fair, 30 (18.1%) said is good, while 20 (12.1%) said is excellent

We conclude that there is fair extent of fairness, transparency and

accountability operationlized in returns given to shareholders as

recommended by the principles.

Table 13: Research Question 111: How Adequate is the compliance and

commitment of the listed companied to the code?

Option Respondent Percentage

a. Adequate 105 63.6

b. Not Adequate 60 36.4

Total 165 100%

Source: field survey, 2009

The table 13 above shows that 165 (63.6%) of the respondent were of the

opinion that the compliance and commitment of the listed companies to the

code is adequate. While 60 (36.4)% said is not adequate.

Therefore, we conclude that there is adequate compliance and commitment

of the listed companies to the code

REFERENCES

Aborede R. (2005) Financial Mangement, jundich publishers and Co. Lagos

Company and Allied Matters Act, 1990

Annual Reports

7up Bottling Company, Annual Reports (2000-2005)

Access Bank Nigeria Plc, Annual Reports (2000-2005)

Afribank Nigeria Plc, Annual Reports (2000-2005)

AIICO Insurance, Annual Reports (2000,20001,2003-2005)

CFAO Nigeria, Annual Reports (2000-2005)

Crusader Insurance, Annual Reports (2000-2005)

Ecobank Nigeria Plc, Annual Reports (2000-2005)

First Bank Nigeria Plc, Annual Reports (2000-2005)

First Inland Bank Plc, Annual Reports (2001-2004)

Floor Mills Nigeria, Annual Reports (2000-2005)

Guaranty Trust Bank Plc, Annual Reports (2000-2005)

Guinness Nigeria Plc, Annual Reports (2001-2005)\

Intercontinental Bank Plc, Annual Report (2001-2005)

Mobil Nigeria Plc, Annual Reports (2001-2005)

NESTLE Nigeria Plc, Annual Reports (2000-2005)

Niger Insurance, Annual Reports (2000-2005)

Nigeria Bottling Company, Annual Reports (2000-2005)

Nigeria Breweries Plc, Annual Reports (2000-2005)

PZ Industries Nigeria, Annual Reports (2003-2005)

Royal Exchange Assurance, Annual Reports (2000-2005)

TEXACO Nigeria Plc, Annual Reports (2000-2005)

Total Nigeria Plc, Annual Reports (2000-2005)

UAC Nigeria, Annual Reports (2000-2005)

Unilever Nigeria, Annual Reports (2000-2005)

Union Bank of Nigeria, Annual Reports (2000-2005)

United Bank of Africa Plc, Annual Reports (2000-2005)

WAPIC Insurance, Annual Reports (2000-2005)

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATION:

5.1 SUMMARY OF FINDINGS.

There are many issues articulated under the concept of corporate governance

in listed companies mainly in fundamental like fairness to shareholders, right

of shareholders, risk management, transparency and accountability,

regulation, compliance and commitment. The study after analysis were able

to discover viz:-

1. Based on the cross-sectional analysis banking sector give least

dividend values to its shareholders when compared to others sector

under the study. Herein banking industry returned an average of

14% which is the least among the companies under the study. This

percentage is quite low when compared with periodic industrial

average of 23.8%, 20.7%, 28.2%, 16.3% and 16.3% given to

shareholders of insurance breweries, petroleum, food and

beverages and conglomerates respectively.

2. The study discovered that values not distributed to shareholders

were retained for the business development and the retentions from

part of wealth to shareholders. From the analysis this study

revealed that values banks saved from non-distributed dividend to

shareholders were retained for business development. Banking

industry retained a period industrial average of 19.2% of the

wealth created while insurance companies retained 19.8%. other

sectors such as Breweries conglomerate, food and beverages and

petroleum retained a periodic industrial average of 8.1%, 9.4%,

11.6% and 9.7% respectively.

3. it was discovered that the summation of the dividend distributed

and wealth retained make up of the total returns to the shareholders

Banking industry score third among the six industries is 25.7% to

43.6% while the banking sector giving 33.1% of wealth generated

to the shareholders. Further analysis revealed that banks averagely

give as much as 11.7% of total value generate to the government, a

percentage that is higher than 7.1%, 10.1% and 11.68% given by

insurance, conglomerate and food and beverages.

Nigerian banks gives more values to employees than every other industry

sample in the study. A periodic industrial averages of 39.2% is given to

employees of banks. The closest institutions that followed banks are the

insurance, food and beverage and conglomerates. The periodic industrial

average of value to employee for these industries stood at 37.6%, 37.6% and

35.9% respectively. Lastly financial misdistributions made some savings for

not giving values to debt capital providers since they did not utilize debt

capital for wealth generations within the period under review.

4. The study discovered that the good corporate governance practice

practicalized balancing of the stakeholders interest through

adequate auditing, proper risk management, information

transparency, proper sense of shared values and accountability well

targeted regulatory framework etc. by the firms.

5. it was revealed that there is fair extent of fairness, transparency and

accountability operationalized in returns given to shareholders as

recommended by the principles.

6. also the study found that there is adequate compliance and

commitment of the listed companies to the code of good corporate

governance in Nigeria.

5.2 CONCLUSION

In Nigeria the concern of good corporate governance have a national

issue even among the government policy makers. As a regulatory and

restructuring framework corporate governance can be a powerful lever for

change throughout our listed companies and economy in general. Because

the effect of adoption or complying and committing effort to the dictates of

corporate governance with good enabling environment will create a bigger

change in ownership, leadership, operation, accrued values or benefits both

to the stakeholders, shareholders and government respectively.

However, the demand and interest of good corporate governance will

bring in fairness, transparency and accountability in the face of every

activities, role and responsibility because it create a distinct structure gear

performance, boost economic/business development and expansion

otherwise accelerate growth of the entire economy. Thus, fair and equitable

sharing of returned value hopefully will build trust, due progress and reform

or revamp the corporate image holistically.

5.3 RECOMMENDATIONS

The researcher suggested the following as a gearing force to support the

influence of corporate governance.

1. the regulatory and supervising bodies i.e. stock exchange and capital

market authorities i.e. (SEC) should influence the listed companies

especially through listing requirements and annual reports.

2. there should be an increase effort to recognize the importance of

reflecting the specific cultural values of the country in defining the

context of what constitutes good corporate governance it interest

spiritual collectiveness above individualism, an inclination towards

consensus, non-prejudicial culture and high standard of morality and

perpetual optimism.

3. there should be need for an inclusive approach in order it ensure that

companies succeed at balancing economic efficiency and society’s

broader objectives.

4. there should be need to create an stand-by committee to checkmate

and monitor or scrutinize every companies auditing and annual

statement to avoid fictitious information eroding the transparency and

accountability of the documents.

5.4 AREA FOR FURTHER STUDY

The listed areas includes

1. Impact of corporate governance and the enterprises culture: the role of

the stakeholders.

2. comparative study of measuring corporate governance and risk in the

public sector organization in Nigeria.

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ANNUAL REPORTS

7up Bottling Company, Annual Reports (2000-2005)

Access Bank Nigeria Plc, Annual Reports (2000-2005)

Afribank Nigeria Plc, Annual Reports (2000-2005)

AIICO Insurance, Annual Reports (2000,20001,2003-2005)

CFAO Nigeria, Annual Reports (2000-2005)

Crusader Insurance, Annual Reports (2000-2005)

Ecobank Nigeria Plc, Annual Reports (2000-2005)

First Bank Nigeria Plc, Annual Reports (2000-2005)

First Inland Bank Plc, Annual Reports (2001-2004)

Floor Mills Nigeria, Annual Reports (2000-2005)

Guaranty Trust Bank Plc, Annual Reports (2000-2005)

Guinness Nigeria Plc, Annual Reports (2001-2005)\

Intercontinental Bank Plc, Annual Report (2001-2005)

Mobil Nigeria Plc, Annual Reports (2001-2005)

NESTLE Nigeria Plc, Annual Reports (2000-2005)

Niger Insurance, Annual Reports (2000-2005)

Nigeria Bottling Company, Annual Reports (2000-2005)

Nigeria Breweries Plc, Annual Reports (2000-2005)

PZ Industries Nigeria, Annual Reports (2003-2005)

Royal Exchange Assurance, Annual Reports (2000-2005)

TEXACO Nigeria Plc, Annual Reports (2000-2005)

Total Nigeria Plc, Annual Reports (2000-2005)

UAC Nigeria, Annual Reports (2000-2005)

Unilever Nigeria, Annual Reports (2000-2005)

Union Bank of Nigeria, Annual Reports (2000-2005)

United Bank of Africa Plc, Annual Reports (2000-2005)

WAPIC Insurance, Annual Reports (2000-2005)