Directors and Corporate Governance in the Banking Sector: Evidence from Nigeria
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A Publication of The Institute of Chartered Accountants of Nigeria
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A healthy corporate governance culture is imperative in the banking sector where the retention of
public confidence remains of utmost importance. In this regard, the board of directors are the
essential fulcrum upon which the mechanisms of corporate governance and management rest. In
Nigeria, however, poor corporate governance has been identified as one of the major factors in
virtually all known instances of distress in banks. This is taking place against the backdrop of the
existence of Code of Corporate Governance for organizations (including banks) in Nigeria. This
contradiction is evaluated in this study which seeks to identify the challenges of corporate
governance faced by directors in the Nigerian banking sector. Using the ex-post facto research
design, this study draws on the views of executive and non-executive directors of banks in Nigeria,
applying simple percentages, averages and rank order as statistical tools for the analysis of data.
The study reveals the major challenges of corporate governance as the ineffectiveness of audit
committees and lack of shareholder activism. The study recommends, amongst others, that
shareholder activism should be legally required and encouraged and the level of such activism
should be reported upon by the chairman in his statement and the auditors in their reports.
Similarly, audit committee should be responsible for hiring, firing and recommending the fees for
non-executive directors and external auditors
Keywords
HF5601 Accounting