How Nigerians Can Influence the Change We Desire
Introduction

There is a general belief that poor corporate governance has been the vulnerable point of numerous companies in both developing and developed countries. This is especially the case with Nigeria, where in spite of being vastly blessed with resources such as oil and a huge labor force, continued to be adversely impacted by corruption. Good governance is a significant step in facilitating market confidence and boosting stable, long-standing global investment flows into the nation. Bearing in mind the business companies are progressively more significant drivers of creating wealth and development, not just in the local economy but also internationally, it is key for Nigerian companies to function within the benchmarks that keep them concentrated on their objectives and make them culpable to stakeholders for the actions and decisions they make.

Definition of Corporate Governance and its Role

The significant necessity for corporate governance emanates owing to the separation of ownership and management in the contemporary corporation. When it comes down to it, the interest of the individuals with efficacious control over a corporation can vary from the interests of the stakeholders who externally finance the firm. This brings about the principle-agent issue, which is mirrored by management undertaking activities that may be damaging to the corporation’s stakeholders (Oman, 2001; Okeahalam and Akinboade, 2003).

Imperatively, the agency issue can solely be alleviated through the safety’s resultant from good corporate governance. Up until now, there is not a collectively acknowledged definition of corporate governance. In a wide-ranging delineation, corporate governance alludes to the public and private establishments, including legislations, regulations and accepted business processes, which within the economy, oversee the correlation between firm managers and those investing resources in corporations (Oman, 2001; Okeahalam and Akinboade, 2003). Corporate governance as a conception is perceived simply as being concerned with the structures within which a business entity or firm obtains its placement and direction (Ejuvbekpokpo and Esuike, 2013).

Corporate Governance is known as an arrangement of law and sound methodologies by which companies are coordinated and controlled concentrating on the inward and outer corporate structures with the goal of checking the activities of administration and executives and in this way, alleviating office dangers which may come from the wrongdoings of corporate officers. Conflicts of interest between the controlling shareholders and the minority shareholders may come about owing to the reason that the controlling shareholders, akin to controlling managers, can sidetrack some of the corporation’s resources for their own individual benefit to the detriment of non-controlling shareholders (Islam, 2010).

With regard to the corporation’s managers, these individual benefits may come about as extreme and unwarranted perquisites, for instance, corporate jets and extravagant headquarter structures, as well as postponing essential restructuring decisions to evade hostile opposition with employees, labor unions, political figures and media (Islam, 2010).

Corporate governance is the manner in which firms are controlled and in which those accountable for the direction of the corporation are accountable to the firm’s stakeholders. It is correlated to the formation of long-term relationships with both external and internal stakeholders. It is a system that is utilized to facilitate the direction and control of a corporation. It encompasses relationships between, and accountability of, the corporation’s stakeholders, as well as the regulations, course of action, procedures, practices, criteria, and principles which might influence the direction and control of the organization (Conyon, 1997).

Effective corporate governance lessens the control that is given to management by shareholders and creditors and as a result increasing the likelihood that managers make an investment in positive net present value activities and projects (Morck et al., 1998). Efficacious corporate governance practices are essential to achieving and maintaining public trust and confidence amongst corporation in addition to being pivotal to corporate performance. It ought to facilitate successful, effective and profitable management that can provide stakeholder value in the long-standing period.

Mudashiru et al. (2014) point out that a huge size of the company board of directors, board skill, management skill, extensively serving Chief Executive Officers (CEOs), size of the audit committee, independence of the audit committee, annual general meetings (AGMs), and dividend policy have a positive correlation with the performance of organizations.

Based on these results, it is recommended that corporations ought to espouse good corporate governance practices in order to enhance their performance and also safeguard the interests of their various stakeholders. More imperatively, the regulatory authorizes have to make certain that there is compliance with good governance and guarantee the application of suitable sanctions for non-compliance to facilitate the growth and development of the different industries within a nation (Mudashiru et al., 2014).

Corporate governance can be examined by laying specific emphasis on stakeholder theory. This is linked to existence of several parties vested in the welfare of the firm and these parties more often than not have rivaling interests. On the one hand, there are shareholders who may embrace investments with high yields but that are risky projects. On the other hand, this may not be welcomed by credit providers particularly when the firm is almost becoming bankrupt (Deegan, 2015).

It is imperative for firms to undertake stakeholder management in order to survive and attain success in the long-term owing to the reason that every stakeholder group supplies the organization with important resources or makes some sort of contribution to the organization (Deegan, 2015). In return, every group has the expectation that its interests will be satisfied through incentives. For instance, investors give the organization financial capital and in return they have the expectation that the organization will make the most of the risk-adjusted return on their investment. In the same manner, creditors provide the organization with finance and in return expect their loans to be reimbursed in a timely manner (Fama and Jensen, 1983).

Employees and management provide the organization with their time, set of skills and human capital devotions and in return they expected to be given equitable compensation and adequate working environments. Consumers supply the organization with revenues and in return have the expectation of value for money. Similarly, the organization’s suppliers provide inputs and pursue fair prices and reliant buyers in return (Fama and Jensen, 1983).

Most of all, local communities provide the organization with sites, local infrastructures and possibly favorable tax treatment. In return, they expect to interact with corporate citizens who improve or do not harm their quality of life. Taking into consideration that...…on corporate governance. Numerous illegal and unethical practices such as insider trading as well as self-dealing are extensive and prevalent. These sorts of transgression more often than not failed to be punished and even worse get overlooked, even in the event that severe penalties are applicable from a theoretical perspective.

Implementation of corporate government is also weakened in Nigeria owing to ineffective auditing. The nation delegates the setting of accounting and auditing benchmarks to the accounting bodies. Imperatively, in the Nigerian setting, the capacity to provide backing to the enforcement of decent corporate governance is demoralized by the presence of weak monitoring and implementation. Application of rules is by and large weak and subject to external impact by politicians, and this continues to damagingly impact good corporate governance in Nigeria. Bearing this in mind, it is necessary to introduce a strong willed legal and judicial system that can fight corruption and properly execute the laws in place devoid of being swayed by the politicians.

In order to make certain that an efficacious corporate governance structure is in operation, it is imperative for Nigeria to institute and implement a suitable and efficacious legal, regulatory and institutional basis where all of the participants in the market economy can depend on. In Nigeria, these legal and regulatory systems are existent and have been positioned to safeguard the rights and obligations of stakeholders, legislation and regulations for undertaking businesses and fines that are levied for violating such regulations. Nonetheless, there continues to exist an issue of monitoring and implementing such legislations and processes and hamper efficacious execution of corporate governance.

Governance professionals needs to partake in the revamping of the implementation mechanism and composition of audit committees, whose members and participants need to be more cognizant and perceptive of their responsibilities. It is imperative for auditors to make certain that there is stringent compliance with codes of conduct, dedication and vigilance of board of directors, take care of the need for high levels of transparency and disclosure, enhance regulatory frameworks by making the legislations accessible to all stakeholders and the general public. The recommendation also takes into account inventing active mechanisms for the implementation of legislations, reinforcing mechanisms by providing training and equipment, and espousing alternative mechanisms for resolution. Most of all, it is necessary to form an empowering setting by sustaining the political willpower to carry out policies and generate an independent, daring and spirited judiciary (Okpara, 2010).

Conclusion

Governance in any nation across the globe necessitates transparency in order for individuals to efficaciously ascertain whether their interests are being served. More importantly, good corporate governance must act in a transparent way in order for the owners of the corporations and investors can make insightful decisions regarding their investments. In the case of Nigeria, for good corporate governance to have a meaningful effect, the essential political willpower and institutional framework, as well as a resolute legal system to implement compliance must be instituted.

Some of the challenges precluding good corporate governance in Nigeria originate from the nation’s culture of longstanding and entrenched corruption together with political support, which is signified by exceedingly weak regulatory frameworks and repudiation of government agencies to carry out and monitor compliance.