Corporate Governance

MBA643- Corporate Governance
1.

Interlink ages among business participants in Nigeria.
MD/CEO: They run the Organization and see to the day to day running of the company. Major decision makers of the business. In Nigeria, they stand has representatives of the board of directors, people who are usually made the Managing directors or Chief executive officers are those who have spent a numberof years with the company and have invested a lot for the existence of the business.
Board of Directors: The Board of directors depends on the MD/ CEO for the daily running of the company. They meet regularly to make business decisions and access the company’s performance. The MD gives a report to the board. There usually is no restriction as to the number of people on a board, and the members arereferred to as Directors, who are sometimes owners, managers or in most case the people elected or assigned by the owners of the business. The directors who are part of the management team are referred to as Executive directors. The selection and dismissal of any one is done by the shareholders in the general meetings.
Shareholders: They are the owners of the company by signing a memorandum ofassociation but they usually do not get involved in the day to day running of the business. They depend on the BOD and Auditors to make right business decisions and present a true and fair picture of the activities of the company respectively. The shareholders determine the auditors who are outsourced to audit the company for transparency.
General Manager/ GM: Are part of the employees, they areput in such positions in other to carry out actions and activities recommended. They try to do a good job of making the books look right or making genuine profit. They mostly interface with the auditors or consultants, by trying to understand the audit techniques.
Regulators: We have a lot of regulatory bodies that review the company’s accounts/ financial statement on a regular basis. Theyensure accounting/ tax principles or guidelines are being followed. They also serve in the interest of shareholders. E.g. of regulatory bodies in Nigeria- Security and Exchange Commission (SEC), Central Bank of Nigeria (CBN), Corporate Affairs Commission (CAC) and the Nigerian Deposit Insurance Corporation (NDIC).
Auditors: they act on independent external bodies reviewing the company’s accounts toensure they have been reported truly and fairly. The shareholders, investors and public look up to them for adequate representation of the account. They work closely with the GM/ Managers to understand the businesses and ensure they fall within the expected standard. They also give qualitative and quantitative data which is then interpreted to ensure they are on top of their game.
Customers/Investors:

2. Agency problem in Nigeria
While my country, Nigeria is very rich in resources, it cannot be described as a rich country owing to many years of mismanagement, political instability and economic turmoil. This inability has a direct relationship with the need for efficient corporate governance strategy in Nigeria for sustainable development. The so-called regulatory bodies mentionedabove consists of Board members picked from the pool of high-profiled retired senior military officers and civil servants without expertise in basic finance and business operations.

The executive and independent non-executive board members are elected by the shareholders and board members place higher premium on the shareholders to encourage flow of investments. In the Nigerian context,handpicked board members (executive or non-executive) are not independent and are not necessarily bound (legally or by default) to place higher value on shareholders’ interests nor protect the business interests, let alone the interests of stakeholders.
It is reported that too much power is concentrated on the Chief Executive Officer (CEO), and the CEOs, more often than not, are also the Chairmen of the...