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THE EFFECT OF CORPORATE GOVERNANCE ON ORGANIZATION PERFORMANCE IN NIGERIA

ABSTRACT

This study examined the corporate governance and its impact on the management of Forte Oil Nigeria Plc Kaduna. Research questions guided the study. A survey method was used for this study. The population consisted of all the management staff of Forte Oil Nigeria Plc Kaduna with a total population of twenty-five (25) persons. The entire 25 person were selected for the study. A questionnaire developed by the researcher based on 5-point likert scale was used for the study.  Mean scores and frequencies were used to analyze the data based on the research questions. Research results shows that internal and external mechanism of corporate governance are used to regulate the performance of Forte Oil Nigeria Plc. The control mechanism put in place by Forte Oil Nigeria Plc include internal and external auditing as well as board of director monitoring and balance of power. The systemic problems militating against corporate governance include high cost of monitoring, inadequate supply of accounting information to shareholders.

CHAPTER ONE

INTRODUCTION

1.1         Background of the Study

Corporate governance is regarded as the key foundation for effective organizational performance and for organizations to be more productive, governed and controlled. The level of collapse of institutions and failure of firms across the world has also emphasized the need to study the ways by which organizations are governed and controlled. Lee (2008) defined corporate governance as a system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance.” It has been reported that the survival of firms is associated with the type of corporate governance and management followed in the organization. Corporate Governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customer and communities affected by the corporation’s activities. Informal stakeholders are the board of directors, executives and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-term success which is intended to increase the confidence of shareholders and capital market investors.

Corporate Governance is a number of process, customers, policies, laws and institutions which impacts on the way a company is controlled. An important theme of corporate governance is the nature and extent of accountability of people in the business and mechanisms that try to decrease the principal agent problem (Wikipedia, 2011).

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