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. The World Bank (2009) states that corporate governance comprises two mechanisms, internal and external corporate governance. Internal corporate governance, giving priority to shareholder’s interest, operated on the board of directors to monitor top management. On the other hand, external corporate governance monitors and controls manager’s behaviours by means of external regulations and force, in which many parties, such as suppliers, debtors (stakeholders), accountants, lawyers, and providers of credit and investment bank. In the past, so many corporate organizations have been caught of getting involved in unethical practices, for example the discovery of financial scam by the Central Bank of Nigeria after the consolidation exercise, involving seven top bank executives in Nigeria, which puts the credibility of their corporate image under suspicion, which further shocking investors’ confidence.

Consequently, corporate governance mechanism has been a crucial issue in organizational performance. It is on this background that the researcher sees the subject matter and intend   to study the effect of cooperate governance on organizational performance in Nigeria.

1.2       Statement of the Problem

In the past, so many organizations such banks in Nigeria have been involved in unethical practices, which puts the credibility of their corporate image in doubt. As such, banks in Nigeria just like other company have been constraint with issues arising from customer’s complaint of exploitations of customers by the banks through some illegal deductions before or after banking transactions. Previous researches into the subject have brought to light the poor governance of so many companies with indebted accounts in Nigeria economy. Some time, the accounting systems of this organization does not reflect the firm financial status. A typical example is the financial scam of Oceanic and Intercontinental Bank after the consolidation (Modesty 2013). Most management of such outfits

were not accountable to stakeholders of the companies. Besides, the regulatory agencies were short of authority, corruption and kickbacks were part of the system in the companies. The problem is that they are several corporate organization with different kind of polices governing their system of operation without effective governing polices and such may have influence on the organization. It is based on this problem that the research seeks to study the effect of corporate governance on organization performance in Nigeria; using selected Banks as a case study

  • Objectives of The Study

The main objective of this study is to ascertain the effect of corporate governance on organization performance in Nigeria. Other specific objectives are as follows:-

  1. To investigate the governing structures of the selected banks.
  2. To ascertain the extent which corporate board independence affects the performance of a banking organization.
  3. To determine how corporate board sizes affect organizational performance.
  4. To determine the relationship between corporate governance and performance of the banks.
  5. To ascertain how CEO-Duality of an organization affect the performance of a firm.
    • Research Questions

The researched posed the following questions in order to gather relevant responses and to effectively investigate the effect of corporate governance on performance of organization. These questions are as follows:-

  1. What is the structure of the governance in most banking system?
  2. To what extent does corporate governing board independence affect the performance of a banking organization?
  3. To what extent does corporate board size affect organizational performance?
  4. What is the relationship between corporate governance and performance of a banking system?
  5. What extent does a firm CEO- duality affect organizational performance?

1.5       Research Hypotheses

The following hypothesis was used to test the responses of the respondents to the research question posed.

H01: there are no significant corporate governance structures in most banking system.

H02: corporate governing board independence has no significant effect on the performance of a banking organization.

H03: corporate board size has no significant effect on the performance of an organization.

H04: there is significant relationship between corporate governance and performance of a banking system.

H05: an organization CEO-duality has no significant effect on organizational performance.

  • Significance of the Study

The study will be of great benefit to banking organization and other corporate organization who what to increase their performance in order to enhance the image of their organization and at the same enhances the growth of their organizations. The study will also be of benefit to any who want to embark on establishing an organization that will in one way or the other contribute to the society and that the same time earning a living from it. It will serves as a source of material and reference for other fellow researchers who will want to research on the effect of corporate governance on performance of organization.



  • Scope of the Study

The scopes of the study covers the effect of  corporate governance on performance of an organization using the  access bank, eco bank, diamond bank and Zenith bank as a selected case study.