EFFECT OF GOOD CORPORATE GOVERNANCE

ABSTRACT

The project “The effect of good corporate governance on the profit of Zenith International Bank Plc. is intended to look into the principles by giving the definition, objectives, significance, problems and other study relating to the company to enable the auditor make necessary recommendations.

Furthermore, the research went further to discuss the methodology adopted, in conducting the research, how data was collected and appropriate analysis and interpretation was done to make the project meaningful.

Finally, interference was drawn, and the whole project was summarized and conclude based on researcher findings.                  

CHAPTER ONE

INTRODUCTION     

Corporate Governance can be defined as the system by which companies are directed and controlled. Statuary control of corporate governance has been with us for a long time and has increased overtime. Corporate Governance is the system by which companies are directed and managed in the best interest of the owners and investors. It refers to the role of the board of directors, executives and non executives. Shareholders right and other actions taken by shareholders to influence corporate decisions.

Corporate Governance covers all the general mechanisms by which management are led to act in the best interest of the companies’ owners.

According to Piplock (2004) “Corporate governance is the set of rules and practices that government relationship between the managers and shareholders of corporations as well as other stakeholders like employee creditors, tax authorities, trade unions, suppliers and other public authorities.

THE ESSENCE OF GOOD CORPORATE GOVERNANCE                    

1.           Corporate governance aims to promote culture in which directors will give privacy to the ethical pursuit of shareholders best interest.

2.           Corporate governance allows a review of audit regulation corporate disclosure framework and shareholders participation to improve the accountability and transparency of companies.

3.           It ensures that audit committee assist the board of directors in its oversight of the integrity of the financial statement of the company, as well as compliance with legal and regulatory requirement and the performance of the company’s internal audit function.

4.           It renders companies to be more credible, domestically and internationally, and ensure managerial system that promote creative and progress entrepreneurship.

5.           Corporate governance helps to maximize corporate value by enhancing the transparency and efficiency of corporation for the future.

6.           The role of corporate governanceis to prevent expropriation to investors by managers.

7.           Good corporate governance would prevent theft and fraud thought mechanisms designed by the board and management.

8.           Corporate governance deals with the ways providers of finance to companies assure themselves of getting a return on their investment.                                

STRATEGIC MANAGEMENT IN CORPORATE GOVERNANCE

Strategic management is the process of making and implementing strategic decisions or corporate decision it is about the process of strategic change (Adeleke, Ogundele and Oyenuga 2004).

Bowman and Asch (1987) define it as the match an organisation makes between its own resources and threats, risks and opportunities created by the external environment in which it operates. Strategy can be seen as the key link between what an organisation wants to achieve its objectives and policies adopted to guide its activities and plans for achieving those goals stated in a way as to define the business the organisation is engaged or is to be engaged in.

The importance of strategic management within he framework of Corporate Governance are:

(1)         The concept of strategy is assumed to be concerned with the organisation as a whole.

(2)         It is concerned with the long-term direction of an organisation.

(3)         It is distinguished from operational matters which are concerned with the day-to-day aspects of running an organisation.

(4)         The skills of strategic management are considered to be a high order and often assumed to be found at the senior levels within the organisation.