CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Corporate governance in does not have a long history. However, corporate governance has become a familiar term for everyone due to series of irregular accounting scandals all around the world revealed. Corporate governance is vital to the operations of firms and is relevant to organisations’ interest. On a broader perspective, corporate governance as defined by Gillan and Starks (2000) as a system of laws, rules and factors that control operations of a corporation, that is it refers to the distribution of rights and responsibilities among different participants in the organisation such as the board of directors, managers, shareholders and other stakeholders. It equally spells out the rules and procedures for making decisions on corporate affairs. The core issue of governance of a corporation is how to ensure that managers will use the company’s reserves in the interest of the organization. Because of the transparency required, the information asymmetries between the outsiders and insiders are more pronounced especially as it relates to the risks characteristics and the quality of the assets. Corporate governance mechanisms can be grouped into internal (e.g., the board) and external (e.g., the market for corporate control and the managerial labor market) corporate governance mechanisms.
1.2 Problem of the study
Poor corporate governance is one of the major factors that contribute to poor performance among the selected federal government organization in borno state. Weak corporate governance is as a result of weak internal control systems, excessive risk taking, override of internal control measures, absence of or non-adherence to limits of authority, disregard for cannons of prudent lending, absence of risk management processes, insider abuses and fraudulent practices remain a worrisome feature of the government system (Soludo, 2004).However, it does not follow that those who have good governance processes will perform well or be immune from failure. Risk exists to some extent at the heart of any business. Risks are taken in the search for rewards. No system of corporate governance can prevent mistakes or shield companies and governments from the consequences of error. Corporate failures will occur.” (Owen. J 2003).Good corporate governance is also no guarantee of success. It is a necessary but not sufficient foundation for success as many factors come to play most especially is strategic factors play important role in determining the eventual success or failure of an organization. It is in the light of the above debate, that this research work assessed the impact of corporate governance as a strategy for prudent management in selected federal government organization in borno state
1.3 Purpose of the Study
The general purpose of the study is to access the impact of corporate governance as a strategy for prudent management in selected federal government organization in borno state. The specific research objectives of the study are;
• To investigate the association Responsibility and organizational satisfaction
• To examine the relationship between corporate governance and prudent management in an organization
1.4 Research Questions
• What is the association Responsibility and organizational satisfaction?
• What is the relationship between corporate governance and prudent management in an organization?
1.5 Research Hypotheses
Ho1: there is a significant relationship between corporate governance and prudent management in an organization.
1.6 Significance of the study
The study will be of great help to standing corporate governance committees monitor, update, and improve existing corporate governance codes.
The study can furthermore be a useful reference for any public or private organization interested or engaged in fostering corporate governance reforms efforts and who might be consulted about or associated with a new corporate governance initiative.
The study will provide useful support to multilateral and bilateral development agencies engaged in funding and supporting local corporate governance reform programs and strengthening corporate governance and disclosure practices at the company level. The study also be of help to students, researchers, etc, willing to research more on the topic.
1.7 Scope of the Study
This study centers on Assessment of the impact of corporate governance as a strategy for prudent management in selected federal government organization in borno state
1.8 Limitation of the study
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Attitudes of Respondents: The researcher encountered the major challenge from the respondents on their typical reluctant attitude to fill the questionnaire or grant interview. In some cases, some respondents expect to be paid for the use of their time and knowledge; if otherwise, they were very reluctant in giving the required information. Some hoard information in keeping with the oath of secrecy. In spite of repeated assurance of confidentiality most of them fear the loss of their job and some were too busy to grant interview and fill the questionnaires correctly.
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
