CHAPTER ONE

INTRODUCTION

1.1       Backgroundto the Study

       Corporate governance has receivedgreater attention from regulators, professionals and academics following aseries of corporate scandals that had happened in large companies around theworld. The issue of corporate governance has attracted the attention of bothbusiness market leaders and regulatory authority around the globe, aiming tominimize the scandals rate in companies.

      Shareholders are often considered to bethe corporate proprietors, though company directors are representatives of shareholdersthat are expected to assign business resources in a way to improveshareholders’ fortune. The commitment of several shareholders for investment inorganizations is profit not control (Kadivar, 2006).

      The concepts of corporate governance encompassproblems such as measure of management, degree of control as well as way ofrelationship between the great and small shareholders. Corporate governancespells out the delivery of rights and duties among diverse players in theestablishment; the board, managers, shareholders as well as other stakeholders.It also stipulates the techniques for making decisions on corporate affairs. Inthis fashion, it offers the framework whereby the organisation’s goals areestablished and strategy for reaching those goals and monitoring performance(Kaola, 2008).

      According to Aganga (2011), the issue ofcorporate governance is comparatively fresh in Nigeria, on account of severalcases of corporate misconduct. The shift in Nigeria system of government frommilitary era to the democratic dispensations with a policy to catch theattention of new and environmentally friendly foreign investments entailed therequirement for corporate governance reform. This results in a recognizedcommission to evaluate the presence, adequacy and corporate governancerelevance in Nigeria relative to global best practices as a reaction to the NewInternational Economic Order. Considering the importance linked to theorganization for efficient corporate governance, the Nigerian government, viaits numerous agencies, has constituted several institutional arrangements tosafeguard the investors’ valuable investment from disingenuousmanagement/directors of company in Nigeria (Aganga, 2011). Despite all theefforts and mechanism put in place by government, there are cases of crises,collapses, inefficiencies, and eventual distress among the firms in Nigeria.This may be the consequence of management-shareholder conflict or agencyconflict especially while shareholders want long term maximization of theircompensation and power.