PURCHASE FULL WORK -3500

CORPORATE GOVERNANCE AND IMPLICATION FOR ORGANIZATIONAL EFFECTIVENESS

Business Administration & Management Project Topics

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Corporate governance is a system by which companies (business organizations) are directed and controlled. Dignam and Lowry (2006:4) define corporate governance as a set of processes, customs, policies, laws and institutions affecting the way a corporation (organization) is directed, administered or controlled. They went further to state that corporate governance is meant to ensure accountability of certain individual in an organization through mechanism that try to reduce or eliminate the problem(s) that exist(s) between the principal and the agent.

Singh (2006:73) states that the broad concept of corporate governance is that it is a continuous process of the company which relentlessly pursues through full regulatory compliance, transparency, efficient operational practices, strong internal control and risk management systems, and operating with fairness and integrity to enhance the interest of stakeholders.

O’Donovan (2006:2) opines that corporate governance as an internal control 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. it is a system of structuring operating and controlling a company with a view to achieve a long term strategic goal to satisfy shareholders, creditors, employees, customers and suppliers and complying with the legal and regulatory requirements, apart from meeting environmental and local community need (social responsibility).

Ayida (2004:82) stresses that corporate governance is a set of mechanism through which outside investors are protected from expropriation by insiders (including management, family interest and /or governments). He states that expropriation of outsiders takes many forms: outright theft of assets, transfer pricing, excessive executive compensation, entrenchment of in-depth management terms, diversion of funds to unsuitable projects that benefit one group of insiders etc.

The recent spate of corporate failure in Nigeria especially the private/public owned organizations, has brought to the fore the need to re-examine the issues of corporate governance practices in Nigeria.

Kootnz and Weihrich (2006:425) assert that since 2001, there has been renewed interest in corporate governance in modern corporations due to high profile collapses of a number of US (multinational) firms such as Enron Corporation, MCI Inc., formally known as Worldcom, Tyco, a conglomerate and others. All these corporate failures have rekindled the need to ascertain what makes up corporate governance and the attendant reasons for its failures.

Molokwu (2003:2) states that corporate governance facilitates the achievement of economic development, provides the tools for plugging  loopholes, checking of pilfering and leakages and encourages rationality and virtues which are highly needed in the Nigerian economy.

Johnson and Scholes (1999:19) opine that Corporate governance serving as a tool for corporate profitability in organizations involves corporate planning and control in competitive environment that strategically position them. In their analysis, it was clearly expressed that competition among corporate organizations about the present and future resources available in their environment determines their good corporate governance (competence) as well as achieving their profit objective.

In other words, the ability of corporate organizations to effectively and efficiently manage the complex factors of the environment (commercial, economic, political, technological, cultural and social) is very important in their profit making goals. In coping with competition, a review of opportunities and threats as well as strengths and weakness available in an industry is necessary so as to minimize costs and maximize profit (benefits). It is paramount to note that corporate governance could be utilized in achieving corporate or organizational goals when such an organization address some internal management problems that could hinder her from attaining competitive advantage over her colleagues in the industry. Some internal resources to corporate organizations in good governance includes: location or sitting of such organization, technology, favour, market, human resources and skills (proficiency), responsibility to each of the stakeholders (government, shareholders, creditors, customers, cultural influences etc)( Pool  and Warner, 2000:681).

1.2       STATEMENT OF THE PROBLEM

GET FULL MATERIALS

Leave a Reply

Your email address will not be published. Required fields are marked *