CORPORATE GOVERNANCE AND ITS IMPACT ON THE KEY STAKEHOLDERS OF AN ORGANIZATION

CORPORATE GOVERNANCE AND ITS IMPACT ON THE KEY STAKEHOLDERS OF AN ORGANIZATION

ABSTRACT

          The impact of good corporate Governance on the key stakeholders of an organization is a research problem that must not be underemphasized. The inability of an organization to ascertain and rate stakeholders as regards their influence on the company’s growth and development thereby satisfying certain stakeholders at the expense of others has led to disturbing occurrences in the economy. Thus, it is the responsibility of the management to ascertain those key stakeholder and this is where Good Corporate Governance comes to play. Organization are complex environments and thus, the key stakeholders vary from organization to organisation. This study aims at determining the basis for the identification of key stakeholders, their legitimate claims, reconciliation of these claims and assignments of priorities to them and coordination of these claims with the other elements of the company’s goals and objectives.

Two types of data collection method was used in this study. They include the primary data and secondary data. The primary data used include personal interviews and the administration of questionnaire to the staffs of Golden penny flour Mills, Lagos. The data collected was analyzed through the use of analytical tools like the chi-square. The secondary data include data gotten from published materials, the already existing related literatures and books of renowned Authors.

It was discovered that discovered that there is a relationship between corporate governance and realization of the objectives stated in the company’s mission statement, that corporate governance provides an adequate resource synergy and a sound business practice that allows the organization to focus on long-run objectives instead of that of short term. The study also revealed that equal treatment of all stakeholders by the management in this activities is not feasible. Corporate governance ensures that the organization identifies all the stakeholder groups and weighs their relative rights and their ability to affect the firm’s success, understand the needs of these groups, reconcile stakeholder conflict and assign priorities in accordance with the relative emphasis that the firm will give them. This will enable the organization to satisfy the needs and at the same time optimize its economic place in the market place. Therefore, good corporate governance must be put in place towards the realization of the key objectives of any organisation; because corporate governance is of relevance in the realization of the key objectives of the organization i.e survive through growth and profitability.

It is recommended that Golden penny Flour Mills has to consider the interest of multiple stakeholders in managerial decision making and then stakeholder needs and interests should bee identified by the strategic decision makers; and also ensure that corporate Governance principles are strictly adhered to.

 


TABLE OF CONTENTS

Page

Title                                                                                         i

Certification                                                                             iii

Dedication                                                                               iv

Acknowledgements                                                                  v

Abstract                                                                                   viii

Table of Contents                                                                    xi

CHAPTER ONE

1.0     Introduction                                                                             1

1.1     Background to the Study                                                         1

1.2     Statement of the Problem                                                        6

1.3     Objectives of the Study                                                  7

1.4     Significance of the Study                                                         9

1.5     Research Questions/Hypothesis                                              10

1.6     Research Methodology                                                   12

1.7     Scope and Limitations of the Study                               13

1.8     Definition of Terms                                                        13

1.9     Organization of the Study                                              17

End of Chapter References                                             18

CHAPTER TWO

2.0     Literature Review                                                           19

2.1     Definitions of Corporate Governance                                      19

2.2     Brief History of Corporate Governance                         27

2.3     Code of Corporate Governance                                               31

2.4     Concept of Corporate Governance                               39

2.5     Recent Developments in Corporate Governance                    42

2.6     Corporate Governance and Firm Performance               46

2.7     Significance of Good Corporate Governance                 48

2.8     Benefits of Good Corporate Governance                       50

2.9     Conflicting Stakeholder Interest                                              53

2.10   Corporate Governance and the Principal – Agent Theory      60

2.10.1         Problems that arise from Agency Relationship                     71

2.10.2         Solutions to Principal – Agent problem                         74

2.10.3         Overseeing Strategic Makers                                          75

2.11   Stakeholder Theory                                                        77

2.11.1         Stakeholder Theories (SHT)                                           79

2.11.2         Defects of Stakeholder Theory                                                83

2.12   Stewardship Theory                                                       92

2.13   The Stakeholder Approach to Corporate Governance 94

2.14   Company Mission                                                                   97

2.14.1         The need for an Explicit Mission                                   97

2.14.2         Company Goals, Survival Growth and Profitability     99

2.15   Corporate Governance and the Company Mission                  101

2.16   Stakeholder Engagement                                                         104

2.17   Conflicts of Interest between Shareholders and Mangers                                                                 106

2.18   Corporate Governance and the Nigerian Economy       110

2.18.1         Corporate Governance Measures in Nigeria                  114

2.18.2         Problem of Corporate Governance in Nigeria      121

End of Chapter References                                   123

CHAPTER THREE

3.0     Research Methodology                                         125

3.1     Research Focus                                                    125

3.2     Research Instruments                                           126

3.3     Restatement of Research Questions/Hypothesis 126

3.4     Description of the Population and Sample of

the Study                                                              128

3.5     Sources of Data Collection                                   129

3.6     Description of Questionnaire                               130

3.7     Methods of Data Analysis and Description of

Tools of Analysis                                                         130

End of Chapter References                                   133

CHAPTER FOUR

4.0     Data Analysis, Interpretation and

Discussion of Findings                                         134

4.1     Interpretation of Items                                         134

4.2     Analysis of Data                                                  135

4.3     Test of Hypothesis                                               151

4.3.1  Hypothesis I                                                                  151

4.3.2  Hypothesis II                                                       153

4.3.3  Hypothesis III                                                      155

4.4     Findings.                                                              157

End of Chapter References                                   161

CHAPTER FIVE

5.0     Summary, Conclusion, Recommendations and

Suggestion for Further Studies                                      162

5.1     Summary                                                             162

5.2     Conclusion                                                           164

5.3     Recommendations                                                         166

5.4     Suggestion for Further Studies                                      168

End of Chapter References                                   169

Bibliography                                                        170

Appendix 1                                                          174

Appendix 2                                                          179

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