Factors Affecting The Implementation Of Corporate Governance Accounting Essay


State Owned Enterprises has been seen by many scholars and practitioners as a pipe that drains billions of dollars and because of this, there has been renewed interest in corporate governance reforms in Nigeria amongst public and private sectors. The government on their own part has tried to curb the problems resulting from mismanagement, losses and corruption in the SOEs and their failures to revive these problems resulted to privatizations of SOEs with the intention of allowing professional hands to manage and create employments to citizens but the expectations and objectives was defeated because 80% of privatized enterprises are virtually dead. This paper will focus on evaluating the implementation of Organization for Economic Corporation and Development (OECD) guidelines of corporate governance of SOEs in Imo State Nigeria, which includes the following; first, effective legal and regulatory framework for SOEs; second, The state acting as an owner, third, Equitable treatment of shareholders, fourth, relations with stakeholders and lastly, transparency and disclosure. In this Dissertation will offer a comprehensive treatment of these issues insofar as it provides both thorough descriptive accounts and rigorous statistical analyses of the factors which might explain the challenges of SOEs in fully implementing corporate governance.

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Keywords: Corporate governance; corporate governance code; OECD; SOEs.




The entities of corporate governance provide a structure within which the social and economic life of countries is organized and improved. Corporate governance is related with the exercise of power in corporate bodies.

Good corporate governance is the key for firms to be more dynamic, competitive and productive. The rates of organizational failures and liquidations around the world can be linked to lack of good governance and new concepts or theories on how managers should effectively run their private or state owned enterprises are increasing.

Through past researches it has been observed that the Management of firms and survival of companies are associated with the type of Management that is in place and the global competitive environment requires sound corporate governance.

This research study will examine the factors affecting the implementation of corporate governance in state owned enterprises in Imo State, eastern part of Nigeria. It will looks into ways in which mechanisms in relation to Corporate Governance can be put into place to achieve proper Management, so as to achieve effective productivity.

Nigeria is not left out in the campaign for proper Corporate Governance, especially with recent events of Nigerian Banks closing down or state owned enterprises being crippled through unprofessional decisions made by those on the Board.

This approach not only narrows the dimensions of corporate governance to a restricted set of interests, as a result it has a very limited view of the dilemmas involved in corporate governance. There are competing corporate governance systems in the market based Anglo-American system; the European relationship based system; and the relationship based system of the Asia Pacific (Clarke 2007). But this study will focus on the OECD (2005) guidelines on corporate governance of state owned enterprises. This diversity of corporate governance systems is based on historical cultural and institutional differences that involve different approaches to the values and objectives of business activity.

The OECD provides the most authoritative functional definition of corporate governance: "Corporate governance is the 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 also provides the structure through which the firm's objectives are set, and the means of attaining those objectives and monitoring performance."

However corporate governance has wider implications and is critical to economic and social well being, firstly in providing the incentives and performance measures to achieve business success, and secondly in providing the accountability and transparency to ensure the equitable distribution of the resulting wealth. The significance of corporate governance for the stability and equity of society is captured in the broader definition of the concept offered by Sir Adrian Cadbury (2002): "Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society." It is therefore logical to study the influence of Corporate Governance mechanism on performance of companies.

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There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large firms such as corporations like Enron and MCI Inc

Bold, broad efforts to reform corporate governance have been driven, in part, by the needs and desires of shareowners to exercise their rights of corporate ownership and to increase the value of their shares and, therefore, wealth. Over the past three decades, corporate directors' duties have expanded greatly beyond their traditional legal responsibility of duty of loyalty to the corporation and its shareowners.

Nevertheless "corporate governance," despite some feeble attempts from various quarters, remains an ambiguous and often misunderstood phrase. For quite some time it was confined only to corporate management. That is not so. It is something much broader, for it must include a fair, efficient and transparent administration and strive to meet certain well defined, written objectives. Corporate governance must go well beyond law. The quantity, quality and frequency of financial and managerial disclosure, the degree and extent to which the board of Director (BOD) exercise their trustee responsibilities, and the commitment to run a transparent organization.

Therefore in an attempt to redress Corporate Governance principles and practices, this study looks at ideal ways in which Corporate Governance principles and practices can be executed and used properly, and what factors are necessary, for corporate governance to succeed. Specifically the study shall attempt to establish the relationship between Corporate Governance principles and the productivity of the firm.


The objective of the study is;

To determine the relationship between Corporate Governance and the productivity of a firm.

To identify and understand the factors that hinders good governance.

To appreciate the relevance of Corporate Governance in the Global Market.

To determine the proper elements necessary to achieve sound Corporate Governance.


The subject matter; 'Corporate Governance and its impact on the Productivity of a firm' is aimed at making the following contributions as stated below:

It will enhance firms view on corporate governance and how it can affect the productivity of a firm.

It will allow firms to properly restructure their corporate governance so as to improve effectiveness.

It will give Organizations insight on the various factors necessary for sound governance practice.

It will highlight the role and relevance of stakeholders in a firm.

It would emphasis the benefits to be derived if firms could adhere to proper corporate governance.


The study is limited by the overall objective view of the surveys and interviews. The study is also limited to Peugeot Automobile Nigeria and Nassarawa State University, being the case study under examination, which although the organizations are very diverse in nature; both firms to an extent practice corporate governance.

The extent to which the study will meet the issues raised in the previous section can be curtailed by the realities of data availability in Nigeria. Corporate Governance is a sensitive issue as it focuses on the organizations observance of rules of ethics, social responsibility etc. even in the most advanced opened democracies, companies find it difficult to divulge such issues because they might be considered company secrets; this is even more in Nigeria. Therefore findings of this report will be affected by the quantity quality and reliability of data.


Accountability: the allocation or acceptance of responsibility for actions

Audit: a systematic check or assessment, especially of the efficiency or effectiveness of an Organization or process, typically carried out by an independent assessor.

Balance of Power: the distribution of power among two or more group of people, where the pattern of force and dominance among them is balanced in such a way that no single entity has dominance over another.

Board of Directors:

CEO - Chief Executive Officer

Codes of Best practices - These codes are non-binding rules that go beyond the law, taking country-specific conditions into account and often exceeding the standards set by international guidelines.

Corporate Governance: is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled.

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Remuneration: the paying or rewarding of somebody for goods or services or for losses sustained or inconvenience caused.

Shareholders: somebody who owns one or more shares of a company's stock.

Stakeholders: a person or group with direct interest, involvement, or investment in something, e.g. the employees, stockholders, and customers of a business concern.

Transparency: the quality or state of being transparent (completely open and frank).


This study is divided into five (5) chapters. The first chapter is introduction which includes background of the study, background of the study, statement of the problem, objective of the study, significance of the study, scope of the study, and definition of terms and finally the plan of the study.

The second chapter has to do with reviews relevant literature, which covered areas in corporate governance like an overview of corporate governance; models and mechanisms; governance structure, role of stakeholders; board of directors; board organization or structure; regulations; ownership perspective of corporate governance; governance viewed as leadership; governance as a decision making vehicle; business ethics in relation to corporate governance; link between effective corporate governance practices and firm performance; corporate social responsibility; corporate sustainability; corporate governance reform, benefits and finally a summary.

The third chapter is the methodology and it exposes the methods used in obtaining data and technique used in analyzing data as well as justification of methods of data analysis used.

The fourth chapter consists of the Data presentation and analysis which covers areas like; Directors and the performance of a firm; Management and their influence on profitability; stakeholders impact on the performance of an organization; role of shareholders in the management of a corporation; board structure; board composition; board size; creditors influence; and relevance of Audit Committee.

Finally the fifth chapter consists of the summary, conclusions and recommendations. The summary is an overview on sound corporate governance and how it affects the level of productivity of a firm. Recommendations cover areas like proper roles and responsibilities of both Directors and Management; shareholders activism; positive influence of stakeholders; relevance of Audit; and proper board composition and structure.

Chapter 2

Literature Review

Again, to refer to President Obama's speech, what Africa needs is not more strong men, it needs more strong democratic institutions that will stand the test of time. (Applause.) Without good governance, no amount of oil or no amount of aid, no amount of effort can guarantee Nigeria's success. But with good governance, nothing can stop Nigeria. It's the same message that I have carried in all of my meetings, including my meeting this afternoon with your president. The United States supports the seven-point agenda for reform that was outlined by President Yar'Adua. We believe that delivering on roads and on electricity and on education and all the other points of that agenda will demonstrate the kind of concrete progress that the people of Nigeria are waiting for.


There has been renewed interest in corporate governance reforms in Nigeria amongst public and private sectors organizations (Alo, 2003; Wilson, 2006; Dabor and Adeyemi, 2009; Roe 2003; Ahmed 2007; Olusa, 2007), these practitioners and scholars have written on the benefits of good corporate governance in Nigeria but very few have drawn attention to the challenges posed by the inadequacy of the corporate governance implementation in Nigeria (Iyang, 2009; Wilson, 2006). Whilst Corporate governance might mean different things to different people, the Cadbury Committee's definition of corporate governance as ―the system by which companies are directed and controlledâ€- (Cadbury, 1992) provides a good basis for discussing the challenges of corporate governance reforms in Nigeria. The Organization for Economic Cooperation and Development's definition of corporate governance as ―the structure through which company objectives are set and the means of attaining those objectives and monitoring performance (OECD, 1999; 2004) highlights the importance of resolving the challenges of corporate governance reforms in Nigeria.

Nevertheless,there appears to be no universally agreed definition among scholars regarding the conceptual meaning of state owned enterprises. According to Laleye (1985) the bewildering number and types of the organizations called 'state owned enterprises' their different contents and the rationale for which they are set up accounts for lack of authoritative and generally acceptable definition of state owned enterprises. Sosna (1983) claimed that there are many reasons why in developed capitalist countries, there is no single standard definition of state owned enterprises. State owned enterprises were established at different periods, and each epoch naturally brought forth the types of state owned enterprises most clearly matching its own conditions. It is therefore believed that the variation in definition are informed by the ideological, values, interests, dispositions and circumstances that brought state owned enterprises into existence(Adeyemo,2008)

Whatever the controversy and the lack of uniformity might conjure up, I would however review the viewpoint of some scholars of state owned enterprises. For instance, Efange (1987) define state owned enterprises as institutions or organizations which are owned by the state or in which the state holds a majority interest, whose activities are of a business in nature and which provide services or produce goods and have their own distinct management.

Obadan (2000), Obadan&Ayodele (1998) defined state owned enterprises as organizations whose primary functions is the production and sale of goods and/or services and in which government or other government controlled agencies have no ownership stake that is sufficient to ensure their control over the enterprises regardless of how actively that control is exercised.

The performances of the SOEs in Nigeria have left much to be desired. Many of them are not responsive to changing requirements of a growing and dynamic economy and do not seem to possess the necessary tools for translating into reality the hope of successful commercial operations (Omoleke, 2010). Notwithstanding the huge investments on these enterprises, their performances are far from being satisfactory. It is the general belief of most Nigerians that SOEs are inefficient.

The performance of most public utilities provides adequate testimony for this inefficiency. Perhaps this informed Laleye (1986), who asserted that reports of investigatory panels set up by government on all the parastatals testified to the fact that inefficiency, had reached scandalous proportions. The huge national investments on the SOEs justify the general outcry about inefficiency. Unfortunately, this manifests itself in Nigeria's moribund educational system, inability to supply

portable water and epileptic supply of electricity, and petroleum products with its chaotic attendant long queue in Nigerian petrol filling stations. In the words of Akinkugbe (1996), the hospitals have become mere consulting clinics with no drugs and dressings. All these inadequacies made organizational goals to suffer and

heaped serious problems on the society. The inefficiency of SOEs can be traced to:

1. Conflicting objectives earlier mentioned, Imhonopi and Urim 239

2. Excessive government control and interference with operational decisions of SOE managers; this suffocates managerial initiatives,

3. Politicisation of employment, poor choice of product and location of the enterprises.

4. Absence of a competitive environment to encourage better SOE performance.

5. Inadequate techno-managerial capacity to respond to changing economic environment and

6. Inadequate funding and late release of funds, as the enterprises are often tied to annual budget with its attendant bureaucratic corruption and redtapism. For Balogun (1983), the inefficiency of Nigerian SOEs is traceable to the environment in which they operate, whereas Obadan (2000) identifies poor maintenance culture as the bane of the SOEs. For him, SOEs in many developing countries, as in Nigeria, have been attacked for being economically inefficient and wasteful of resources. This is because they make significant demands on government resources, as well as on domestic and foreign credit and yet these demands have been associated with low profitability and inefficiency. These organizations have failed to show a profit.

Operating on a deficit, they have proved to be a massive drain and economic parasites on government's resources through transfer and subsidies. In order to substantiate the above assertion, in 1998, there were 588 SOEs in Nigeria and this meant that government was responsible for over 5,000 board appointments, thus constituting an economic drain on government's purse. According to the International

Monetary Fund (IMF), the drain of SOEs in 1998 was equal to 5 percent of the nation's Gross Domestic Product (Nigerian Business Magazine, 2000). Also, in

1998 alone, for example, the amount spent on Nigerian SOEs, was N265 billion. These monies, naturally, could have accrued to the government coffers as income and could have been utilised for very important developmental and socioeconomic projects that would have bettered the lives of Nigerians. But such waivers, tax exemptions, unmerited revenues and grants to state-owned enterprises meant they continued to enjoy government's patronage and support. This status quo might have informed the lack of initiative and enterprise on the part of the SOEs since, whether they performed or not, the government would always come to their rescue to clean up their mess and cover their inadequacies and structural flaws. From the foregoing, it is clear that government's desire to achieve economic self-reliance through the evolution and financing of state-owned enterprises failed to meet the objectives of government. Instead, SOEs have been a drain on government's lean coffers; this is not to mention the toll the entrenched corruptive tendencies of government representatives and officials had and are still having on the liquidity of government business.

Emergency of State Owned Enterprises

Omoleke (2010) cites that between 1950 and 1960, the nationalist governments in compliance with Fitzgerald Commission's recommendation established the Nigeria Colliery Department as a public corporation. Also, the Nigerian Ports Authority was created in 1954 while in 1955, the Nigerian Railways transformed to corporation from the railways department. Since the early 50s, the growth of public corporations had been remarkable. With the adoption of a federal set up in 1954, the number of the SOEs increased. It was proliferated with the subsequent creation of States in 1967. Notable in the development of state participation is the New Nigeria Development Company Limited (NNDC) which started in 1949 as Northern Region Production Board. Another example in this category is the Odu'a Investment Company operating in the interest of the Western Nigeria. These organizations emerged in form of Marketing Boards taking care of such crops as cocoa, groundnuts, palm kernels etc. Public enterprises otherwise known as State-Owned Enterprises are businesses or entrepreneurial organizations set up by the national or state governments. These organizations are established, funded, managed and controlled by the government or managed by government-appointed agents. These organizations are found in all sectors of the economy - Nigerian National Petroleum Company (oil sector), Nigerian Universities Commission (education sector), Power Holding Company of Nigeria (power sector), Water Corporation (service delivery sector) and Federal Radio Corporation (communication sector) just to mention a few. The primary goals of the public enterprises into which university education falls are to provide essential services and to legitimize the government in power. These State Owned organizations go by various names such as Corporation, Authority, Commission and Board. When Public Enterprises are mentioned within the Nigerian context, it is greeted with condemnation due to poor performance (Omoleke, 2008). This implies that the organizations are not effectively and efficiently run, hence they no longer provide the services for which they were initially established. Examples are not far-fetched. Academic staff of Universities went on strike in year 2009 and 2010 for good more than six months and consequently the Nigerian education sector almost paralyzed as undergraduate and postgraduate students were sent home. The issue of contention centered on inadequate funding of the Federal and State Owned Universities.

Challenges Facing State Owned Enterprises

Nigerian state owned enterprises suffer from gross mismanagement and consequently resulted to inefficiency in the use productive capital, corruption and nepotism, which in turn weaken the ability of government to carry out its functions efficiently (World Bank, 1991). More so, the World Bank (1996-2011) report also rated Nigerian governance system as one of the lowest and poorest in their world governance index (WGI). Lewis (2006) asserted that there is no question, however, that Nigeria has failed profoundly as a state, a nation, and an economy. Central authorities cannot provide stable governance, in the sense of effective legitimate rule and essential public goods.

According to Imhonopi and Urim (2010) There are factors working against the genuine efforts of government to achieve economic self-reliance in and for the country. These factors are as follows:

1. Corruption: The genuine efforts of government over the years have suffered incessant drawbacks as a result of the entrenched corruptive tendencies and sharp practices engaged in by public officials and political office holders. This frustrates the efforts of government to achieve economic self-reliance either through the deployment of state-owned enterprises or through the creation of social and economic programs in the country. Although, government has put in place the Economic and Financial Crimes Commission (EFCC) to checkmate the incidence of corruption among political office holders and public officials, Nigerians are yet to see the tangible benefits of the anti-corruption war engaged in by the agency.

2. The Nigerian factor: The efforts of government to pursue economic independence for Nigeria has resulted in failed policies and programs because of factors like nepotism, tribalism, lack of meritocracy, federal character, bribery, politicization of benefits and privileges and other corruptive tendencies that have continued to weaken our resolve as a nation to lead the rest of the continent and even the world.

3. Frequent change of policies: Each new government comes into power with its own virgin economic blueprint which it promotes in the place of existing policies. This frequent change in policies does not help to stabilize existing programs, so they can deliver their dividends to Nigerians. Therefore, before a policy implementation process matures, a new policy is introduced, terminating the existing process and denying Nigerians the benefits that could have accrued from such programs. Many healthy and pragmatic programs initiated in the time past by successive administrations in the country have suffered this fate.

4. Multiplicity of economic advisers: One of the strong drawbacks to achieving our economic self-reliance is the engagement of many economic advisers in the life of one single administration. These advisers come on board with different ideologies, programs and initiatives which collapse on one another and entrench the culture of frequent policy somersault and back-flips (Imhonopi,2010). As Aluko (2008) observed, during the eight years' rule as the President of Nigeria, Chief OlusegunObasanjo had six different Economic Advisers/Ministers of National Planning who were supposed to have been responsible for the midwife of the NEEDS. They were Chief Philip Asiodu, Dr Magnus Kpapol (now Director of NAPEP), Professor Charles Soludo, Professor Ode Ojowu, DrOsitaOgu and Senator (Dr) Wali. This situation creates setbacks to the policy formulation and implementation process towards economic self-reliance.

5. Lack of continuity of policies: As a corollary to the above points, genuine efforts of government at achieving economic self-reliance for the nation cannot be realized within a climate of inconsistent policy formulation and implementation. This is one area that the country has almost become acculturated to as a nation. Lack of continuity has led to the existence of many policies but fewer results in practical terms for Nigerians.

6. Low-level of technology: No nation develops its economic constituents without having an enabling technology backbone. The absence of a home-grown or customizable technology platform has denied the country of access to an industrialized and vibrant economic system. The history of the Asian Tigers is an instructive lesson on the need for developing nations like Nigeria to invest in technology tools and the manpower to run these technologies in order for the country to achieve the much anticipated economic self-reliance.

7. Lack of infrastructure: This is another deep-seated crisis facing the nation. The absence of an effective road network, power supply and other social amenities further limits government's efforts to achieve self-reliance. In fact, today, many multinational companies like Dunlop Nigeria and a few others are leaving Nigeria for countries like Ghana where the infrastructural facilities are in place and where the economic climate is supportive of and mild to their business operations.

8. Political instability: Before now, the frequent change of government in Nigeria, which created political instability, resulted in the frequent change in policies. Since independence, Nigeria has experienced repeated change of governments and political leadership. This situation engendered the abandonment of existing policies and the repeated introduction of new policies, creating waste of resources, waste of government's time and denying Nigerians from being positively impacted by these policies.


The Vice President of Nigeria, Sambo Namadi (This Day, 2011) has said that 80% of the privatized firms are moribund. The application of privatization demands some caution. As Usman (1987) has argued, in spite of the fact that privatization is used to restructure public enterprises in a bid to achieve greater efficiency and reduce government's burden, its misapplication can create further distortions that will leave matters worse.

Sawas (1991) has shown that one principal argument against privatisation is that it weakens the local political order and accelerates the decline of citizenship and community. This means that privatisation weakens the social solidarity and cohesion of society and impinges upon citizens' rights. Certain forms of collectivism are needed to uphold societal cohesion and impact positively on social transformation and progress. It is equally expedient to see privatisation beyond its economic and political dimensions as most writers have done. Privati-sation has a large social content especially in developing countries where the citizens' socio-economic rights are often impaired by lack of development. Also, the achieve-ment of social progress, equity in resource allocation and use of collective resources may depend on the extent to which certain concerns, goods or services are provided by collectively owned establishments.

In spite of this, privatisation has long been an issue in the economic and political life of Nigeria. Starting from the 1968 Ani Committee to the Onosode Panel of 1982, privatisation has hovered on the front stage of Nigeria's economic programmes. However, the urge to privatise took a real concrete form with the eventual collapse of the Nigerian economy in the early 80s. Actually, the IMF and World Bank backed Structural Adjustment Programme (SAP) had commercialisation and privati-sation of public enterprises as key thrusts. It was the Babangida government (1984 to 1993) that officially announced privatisation intention in the 1986 budget speech. This announcement may be seen as a reflection of the precarious state of public enterprises then in the country. According to Usman (1987), at the beginning of 1986 there were around 500 companies and parastatals in which the Federal Government had invested over 36 billion Naira as equity, loans and subventions all of which bring in less than 500 million Naira annually. The government was also unhappy that its budget supported a plethora of public enterprises whose services were often costly, management inefficient and subject to political manipulations.

Public enterprises especially those in the essential services sector like Nigerian Telecommunications (NITEL) and National Electric Power Authority (NEPA) or what is now known as Power Holding Company of Nigeria (PHCN) have a perennial history of epileptic performance that attracts social outcry, indignation and frustration all through the time. In addition these enterprises have been characterized by financial

mismanagement, drain on government expenditure, mediocrity and petty internal politicking. Actually, one can argue that the excessive politicisation of these enterprises has made them conduit pipes of financial waste, political patronage and settlement. In such a case, management and staff are often recruited and evaluated on primordial principles and political considerations. Moreover, privatisation has been made all the more desirable or important in the interest of global capitalism with its emphasis on breaking down borders, barriers and obstacles to its ascendancy.

Despite these, a look through the fortunes of the privatisation exercise, in terms of already completed ones, does show much success (Adoga, 2008). So there is still some level of uncertainty on whether the exercise so far has been effective. This certainly is contrary to what obtains in mature socio-political societies like the U.S. where privatisation has improved the over-all standing and performance of hitherto public firms (David, 1988; Sawas, 1991, 1987).

Thus the transfer of public holdings to private hands calls for a more cautious introspection beyond the mere economics of it all. In this case, apart from the fear of a hijack of vital sectors of the economy by the state power elites and the denial of citizens' rights as defined by collectivism in vital concerns of the state, there is the equally crucial issue of how privatisation affects services delivery and costing principles as well as how this impacts on the ordinary citizens. This is quite important when we recognize as Wilson (1988) does that privatization affects material interests and shifts power among local government officials, businessmen and multi-national corporations.

It was the British example in privatisation that stimulated many industrializing and developing countries into the exercise (Ramanadham, 1988; Candoy-Seske, 1988). But while the British exercise was largely successful, the attempts by the developing countries have been trailed by partial success and often massive failures including the concentration of national wealth in the hands of a few self-centred elites constituting or allied to the leadership of these countries. Nigeria provides a classical example in this case. Apparently, the privatisationprogramme has created the highly sought opportunity for massive collaboration and connivance between business and political elites who have used the exercise to recompose and reconstitute their economic dominance. For the political elites, it has created a chance for the laundering of accumulated state resources in economic ventures thereby creating a smokescreen of legitimacy for plunder. Evidently, the political elites either using middlemen or fences have used the exercise toentrench themselves in the economic sector with the loot stolen from the coffers of the state.

OECD Guidelines on Corporate Governance of State-Owned Enterprises

OECD (2005)came up with important guidelines of corporate governance specifically for state owned enterprises. Nigeria though not a member has claimed (Omoleke, 2010) to have embraced its principles. But the application to these steps have not been noted. The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalization.

The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD.

OECD Publishing disseminates widely the results of the Organisation's statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.

Ensuring an Effective Legal and Regulatory Framework for State-Owned Enterprises

The legal and regulatory framework for state-owned enterprises should ensure a level-playing field in markets where state-owned enterprises and private sector companies compete in order to avoid market distortions. The framework should build on, and be fully compatible with, the OECD Principles of Corporate Governance.

A. There should be a clear separation between the state's ownership function and other state functions that may influence the conditions for state-owned enterprises, particularly with regard to market regulation.

B. Governments should strive to simplify and streamline the operational practices and the legal form under which SOEs operate. Their legal form should allow creditors to press their claims and to initiate insolvency procedures.

C. Any obligations and responsibilities that an SOE is required to undertake in terms of public services beyond the generally accepted norm should be clearly mandated by laws or regulations. Such obligations and responsibilities should also be disclosed to the general public and related costs should be covered in a transparent manner.

D. SOEs should not be exempt from the application of general laws and regulations. Stakeholders, including competitors, should have access to efficient redress and an even-handed ruling when they consider that their rights have been violated.

E. The legal and regulatory framework should allow sufficient flexibility for adjustments in the capital structure of SOEs when this is necessary for achieving company objectives.

F. SOEs should face competitive conditions regarding access to finance. Their relations with state-owned banks, state-owned financial institutions and other state-owned companies should be based on purely commercial grounds.

The State Acting as an Owner

The state should act as an informed and active owner and establish a clear and consistent ownership policy, ensuring that the governance of state-owned enterprises is carried out in a transparent and accountable manner, with the necessary degree of professionalism and effectiveness.

A. The government should develop and issue an ownership policy that defines the overall objectives of state ownership, the state's role in the corporate governance of SOEs, and how it will implement its ownership policy.

B. The government should not be involved in the day-to-day management of SOEs and allow them full operational autonomy to achieve their defined objectives.

C. The state should let SOE boards exercise their responsibilities and respect their independence.

D. The exercise of ownership rights should be clearly identified within the state administration. This may be facilitated by setting up a coordinating entity or, more appropriately, by the centralization of the ownership function.

E. The coordinating or ownership entity should be held accountable to representative bodies such as the Parliament and have clearly defined relationships with relevant public bodies, including the state supreme audit institutions.

F. The state as an active owner should exercise its ownership rights according to the legal structure of each company. Its prime responsibilities include:

1. Being represented at the general shareholders meetings and voting the state shares.

2. Establishing well- structured and transparent board nomination processes in fully or majority owned SOEs, and actively participating in the nomination of all SOEs' boards.

3. Setting up reporting systems allowing regular monitoring and assessment of SOE performance.

4. When permitted by the legal system and the state's level of ownership, maintaining continuous dialogue with external auditors and specific state control organs.

5. Ensuring that remuneration schemes for SOE board members foster the long term interest of the company and can attract and motivate qualified professionals.

Equitable Treatment of Shareholders

The state and state-owned enterprises should recognise the rights of all shareholders and in accordance with the OECD Principles of Corporate Governance ensure their equitable treatment and equal access to corporate information.

A. The coordinating or ownership entity and SOEs should ensure that all shareholders are treated equitably.

B. SOEs should observe a high degree of transparency towards all shareholders.

C. SOEs should develop an active policy of communication and consultation with all shareholders.

D. The participation of minority shareholders in shareholder meetings should be facilitated in order to allow them to take part in fundamental corporate decisions such as board election.

Transparency and Disclosure

State-owned enterprises should observe high standards of transparency in

accordance with the OECD Principles of Corporate Governance.

A. The co-ordinating or ownership entity should develop consistent and aggregate reporting on state-owned enterprises and publish annually an aggregate report on SOEs.

B. SOEs should develop efficient internal audit procedures and establish an internal audit function that is monitored by and reports directly to the board and to the audit committee or the equivalent company organ.

C. SOEs, especially large ones, should be subject to an annual independent external audit based on international standards. The existence of specific state control procedures does not substitute for an independent external audit.

D. SOEs should be subject to the same high quality accounting and auditing standards as listed companies. Large or listed SOEs should disclose financial and non-financial information according to high quality internationally recognized standards.

E. SOEs should disclose material information on all matters described in the OECD Principles of Corporate Governance and in addition focus on areas of significant concern for the state as an owner and the general public. Examples of such information include:

1. A clear statement to the public of the company objectives and theirfulfillment.

2. The ownership and voting structure of the company.

3. Any material risk factors and measures taken to manage such risks.

4. Any financial assistance, including guarantees, received from the state andcommitments made on behalf of the SOE.

5. Any material transactions with related entities.

The Responsibilities of the Boards of State-Owned Enterprises

The boards of state-owned enterprises should have the necessary authority,

competencies and objectivity to carry out their function of strategic guidance and monitoring of management. They should act with integrity and be held

accountable for their actions.

A. The boards of SOEs should be assigned a clear mandate and ultimate responsibility for the company's performance. The board should be fully accountable to the owners, act in the best interest of the company and treat all shareholders equitably.

B. SOE boards should carry out their functions of monitoring of management and strategic guidance, subject to the objectives set by the government and the ownership entity. They should have the power to appoint and remove the CEO.

C. The boards of SOEs should be composed so that they can exercise objective and independent judgment. Good practice calls for the Chair to be separate from the CEO.

D. If employee representation on the board is mandated, mechanisms should be developed to guarantee that this representation is exercised effectively and contributes to the enhancement of the board skills, information and independence.

E. When necessary, SOE boards should set up specialized committees to support the full board in performing its functions, particularly in respect to audit, risk management and remuneration.

F. SOE boards should carry out an annual evaluation to appraise their performance.

Research Gap

In the light of the foregoing, it is important to note that the literature on corporate governance convergence does not fully recognise the role of different actors and their roles and strategies. It is necessary to critically examine the dominant suggestion in the literature that national systems of corporate governance are aligning with the Anglo-American modelled 'international best practice system', given the unsettled nature of the shareholder-stakeholder superiority debate. This provides a good opportunity to scrutinise the role of the agents of convergence in relation to the shaping of the ongoing discourse, particularly with regards to the direction of convergence. Thus, in moving the discourse on corporate governance in Africa forward, this paper accounts for the powers and influences of three agents of convergence on the evolving corporate governance paradigm, as generated from the empirical data of this study. It first draws out their respective orientations and strategies, and subsequently investigates the implications of areas of conflict and commonalities on corporate governance in Nigeria. In doing this, the paper seeks to find answers to the following interrelated questions: (add research your questions)

Research Problems/Questions

The world Bank (1996-2011) and other scholars (Oyejide&Soyibo, 2001; Okeaahalam, 2004) has beamed more light the corporate governance situations in Nigeria, stating its deteriorated condition. More so, concerned scholars Obadan (2000), Obadan&Ayodele (1998) have also unveiled the ugly nature of Nigeria state owned enterprises ill situation as being a drainage that wastes billions of dollars from the government purse including the government's decision to privatize them. And interestingconversations from scholars (Omoleke, 2008; Anugwom, 2011; Usman 1998; ThisDay, 2011) on the outcome of privatization of Nigeria state owned enterprises. But there's little or no literature on evaluating or assessing the implementation process OECD guidelines of corporate government on state owned enterprises in Nigeria. Therefore, the research questions are as follows:

What are the factors affecting the implementation of OECD guidelines of state owned enterprises of corporate governance in Nigeria?

What are the possible ways of overcoming these factors (if any)?

Research Objective

The research will attempt to study and identify the following;

The factors affecting the implementation of OECD guidelines of state owned enterprises of corporate governance in Nigeria

The possible way/s which can be adopted to solve the problem/s

Scope of the Study

This study will concentrate on the corporate governance and evaluating the implementation of the OECD guidelines of state owned enterprises in Nigeria. The empirical investigation will draw on data from samples of SOEs in Nigeria over the period 2011-2012.

Research method

This research will engage mutually the qualitative and also quantitative evaluation. Thus, the secondary data will be involved for additional understanding of the nature of the research topic -will be such as magazines, newspaper, company's Annual Reports, Nigeria Code on Corporate Governance, the reports on stock market, the reports on Corporate Governance, Securities Commission reporting, book and etc.