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EVALUATING THE IMPACT OF CORPORATE GOVERNANCE ON THE NIGERIAN BANKING SECTOR. (A CASE STUDY OF THREE SELECTED BANKS IN LAGOS STATE)

Business Administration & Management Project Topics

CHAPTER ONE

INTRODUCTION

1.1                   BACKGROUND OF THE STUDY

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) 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.  Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large (Wikipedia, 2010:1).

Corporate governance is a multi-faceted 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 (Wikipedia, 2010:1).

It is incontrovertible that corporate governance is one of the most critical issues in the business world today.  There was a time when this topic would not have elicited much attention.  But, with episodic failures of many corporations, corporate governance has taken a central stage in business discuss and any intellectual gathering on business management (Oladimeji, 2007:1).

Corporate governance is also a system of structuring, operating and controlling a company, be it bank or non-bank, with a view towards attaining long term strategic goals to maximize shareholders wealth and satisfy other stakeholders, employees, depositors, suppliers, other customers, and other stakeholders (Phillips, 2007:7).

Corporate governance is concerned with improved stakeholder performance viewed from this perspective, corporate governance is all about accountability, boards, disclosure, investor involvement and related issues.  Research has shown that firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditure and fewer corporate acquisition (Oladimeji, 2007:2).

Corporate governance is important for the survival of companies and indeed of national economies in the increasingly global economy. For transition economies, such as Nigeria’s which are faced with the double challenge of restructuring for greater efficiency and creating foreign investment-friendly environment, good corporate governance is crucial for success (Anyaoku, 2010:1).

The day-to-day operations of business have raised the need to install an appropriate frame work for ensuring transparency and accountability in the management of the business ventures.  Thus, the research topic, “Evaluating the Impact of Corporate Governance on Nigerian Banking Sector”.

STATEMENT OF THE PROBLEM

 

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