Corporate Governance Mechanism and Firm Value
CHAPTER ONE
Objective of the study
The objective of this study is to investigate Corporate Governance Mechanism and Firm Value. Using Bua cement as a case study. The specific objectives are;
- To ascertain the effect of corporate governance in Bua cement
- To examine the effect of managerial ownership and value of Bua cement
- To ascertain the relationship between corporate governance and the return on investment to the shareholders
CHAPTER TWO
LITERATURE REVIEW
Introduction
Corporate governance mechanisms encompasses an integrated system of management that ensures and sustained a comprehensive device of controlling the affairs of corporate entity through instituting processes, rules and regulation that enhance value creation. In addition, it is a mechanism that encourage sound systems of internal and external control and information systems control that safeguard stakeholders’ investment and assets of public interest entities. It promotes sound reporting practices and accountability through fair value financial statements that ensures annual reports are duly audited by competent independent auditors For example, board of directors are expected to provide strategic and ethical leadership to a company that ensure that the action of the management is in the owner’s and other stakeholder’s interest. The approach performed the role of advisor and monitor on the firm management in order to enhance and sustain the prosperity of firms and corporate value. Corporate governance as a subject of interest in the field of accounting and management practice has being an area of study for a while without an exhaustive end because other emerging corporate governance issues that are capable of undermining or enhancing corporate value in different sector of the Nigerian economy has slightly or not being examined. For instance, agency problem as a result of inherent information asymmetry subsisting between management and shareholder led to series of corporate failure both in the past and of recent which necessitates further examination. For example, the unprecedented and least expected global corporate scandals such as BCCI, Enron, WorldCom, Northern Rock, Lehman Brothers, Freddy Mac and Fanny Mae and specifically in Nigerian organization such as in Cadbury (Nig.) Plc, Afribank Plc and Lever brothers (Nig) Plc. necessitated the need for further investigation. These series of corporate disasters are ascribed to the failure on the part of the mechanisms of corporate governance to mitigate scandalous practices that undermine the value of firms.
Chapter Three
Research methodology
Research Design
The research design adopted in this research work is the survey research design which involves the usage of self-designed questionnaire in the collection of data. Under the survey research design, primary data of this study will be collected from Bua cement company in order to determine corporate governance mechanism and firm value. The design was chosen because it enables the researcher to collect data without manipulation of any variables of interest in the study. The design also provides opportunity for equal chance of participation in the study for respondents.
Population of Study
The population of study is the census of all items or a subject that possess the characteristics or that have the knowledge of the phenomenon that is being studied (Asiaka, 1991). It also means the aggregate people from which the sample is to be drawn.
Population is sometimes referred to as the universe. The population of this research study will be Seventy-five (75) staffs of Bua cement company, Lagos state
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION
This chapter is about the analysis and presentation of data collected from the field through questionnaire. The analysis of the data with particular question immediately followed by the presentation of findings.
As mentioned in chapter three, 75 questionnaires were administered and 50 were retrieved and necessary analysis was carried out on them and presented as follows:
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain corporate governance mechanism and firm value. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of corporate governance mechanism and firm value
Summary
This study was on corporate governance mechanism and firm value. Three objectives were raised which included: To ascertain the effect of corporate governance in Bua cement, to examine the effect of managerial ownership and value of Bua cement and to ascertain the relationship between corporate governance and the return on investment to the shareholders. The total population for the study is 75 staffs of Bua cement company in Lagos. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Based on the analysis and discussion about board size, independent board, audit committee, and institutional ownership on firm value as listed in bua cement. On conclusion note, among board size, independent board, audit committee, and institutional ownership have positive and significant impact firm value of Bua cement
Recommendation
It is recommended that companies should increase the size of their boards since it’s related to firm performance. However, this increase should be to the extent of fifteen based on the optimal value of partial derivatives. Also, companies may increase outside directors on its board especially independent directors. This may add economic value and enhance transparency.
References
- Khan A, Tanveer T, Malik U. An empirical analysis of corporate governance and firm value: Evidence from KSE-100 index. Accounting. 2017;3(2):119-130. 2.
- Van Horne James J, Machowicz JM. Fundamentals of financial management, 2nd edn, Pearson Education Limited, New Jersey; 2005. 3.
- Smith WK. Dynamic decision making: A model of senior leaders managing strategic paradoxes. Academy of Management Journal. 2014;57(6):1592-1623. 4.
- Shleifer A, Vishny RW. Large shareholders and corporate control. Journal of Political Economy. 1986;94(3,Part 1):461-488. 5.
- Aluchna M. Does good corporate governance matter? Best practice in Poland. Management Research News. 2009;32(2):185-198. 6.
- Lecomte P, Ooi JT. Corporate governance and performance of externally managed Singapore REITs. The Journal of Real Estate Finance and Economics. 2013; 46(4):664-684. 7.
- Wahab NSA, Holland K. Tax planning, corporate governance and equity value. The British Accounting Review. 2012; 44(2):111-124. 8.
- Lopes AB, Walker M. Asset revaluations, future firm performance and firm-level corporate governance arrangements: New evidence from Brazil. The British Accounting Review. 2012;44(2):53-67. 9.
- Jensen MC, Meckling WH. Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics. 1976;3(4):305-360.
- Vintila G, Gherghina SC. Board of director’s independence and firm value: Empirical evidence based on the bucharest stock exchange listed companies. International Journal of Economics and Financial Issues. 2013;3(4):885-900. 11.
- Kamran K, Shah A. The impact of corporate governance and ownership structure on earnings management practices: Evidence from listed companies in Pakistan. The Lahore Journal of Economics. 2014;19(2):27-70. 12.
- Osemeke L, Adegbite E. Regulatory multiplicity and conflict: Towards a combined code on corporate governance in Nigeria. Journal of Business Ethics. 2016;133(3):431-451. 13.
- Shipilov AV, Greve HR, Rowley TJ. When do interlocks matter? Institutional logics and the diffusion of multiple corporate governance practices. Academy of Management Journal. 2010;53(4):846-864. 14.
- Zhang Y, Wiersema MF. Stock market reaction to CEO certification: The signalling role of CEO background. Strategic Management Journal. 2009; 30(7):693-710. 15.
- Adelopo I. Voluntary disclosure practices amongst listed companies in Nigeria. Advances in Accounting. 2011;27(2):338- 345. 16.
- Obembe OB, Adebisi SA, Adeleye OK. Corporate governance, ownership structure and performance of manufacturing firms in Nigeria. Corporate Ownership and Control. 2010;8(1):689-696. 17
- . Code of corporate governance of Nigeria; 2016. 18.
- Adegbite E, Amaeshi K, Nakajima C. Multiple influences on corporate governance practice in Nigeria: Agents, strategies and implications. International Business Review. 2013;22(3):524-538. 19.
