THE EFFECT OF GOOD CORPORATE GOVERNANCE ON THE PROFIT OF ZENITH INTERNATIONAL BANK PLC


Content

 

 

ABSTRACT

 

The project “The effect of good corporate governance on the profit of Zenith International Bank Plc. is intended to look into the principles by giving the definition, objectives, significance, problems and other study relating to the company to enable the auditor make necessary recommendations.

 

Furthermore, the research went further to discuss the methodology adopted, in conducting the research, how data was collected and appropriate analysis and interpretation was done to make the project meaningful.

 

Finally, interference was drawn, and the whole project was summarized and conclude based on researcher findings.                 

TABLE OF CONTENT

Pages

Title

Certification                                                                            i

Dedication                                                                              ii

Acknowledgement                                                                  iii

Table of Content                                                                     iv

 

CHAPTER ONE 

1.1    Introduction                                                                 1

1.2    Background  of the Study                                            1      

1.1       Scope of the Study                                                       3

1.2       Objective of the Study                                                  4

1.3       Purpose of the Study                                                   5

1.4       Limitation of the Study                                                 6

 

CHAPTER TWO 

2.1       Introduction                                                                 8

2.2       Essence of good Corporate Governance                     9

2.3       Principles of Corporate Governance                           11

2.4       The Collapse of Companies                                         12    

2.5       The Responsibility of Key organs of a Company         13

2.6       Structure of the Board of Director                              15

2.7       Ethical and Responsible Decision Making                 16

2.8       Integrity of Financial Reporting                                   18

2.9       Disclosure of Stock Exchange                                     19    

2.10    Protection of Shareholders Right                                20

2.11    Risk Management                                                         21

2.12    Performance Evaluation                                              21

2.13    Remuneration: Fairly and Responsible                      22    

2.14    Corporate Governance                                                23

 

CHAPTER THREE

Research Methodology

3.1       Introduction                                                                 27

3.2       Research Design                                                           27

3.3       Data Collection Method                                               27

3.4       Description of Study Population                                 27

3.5       Sampling Plan                                                              28

3.6       Description of Data Collection Instrument                 28    

3.7       Administration of Data Collection Instruments         28    

3.8       Analytical Tools and Coding Procedures          30

 

CHAPTER FOUR       

Presentation, Analysis and Interpretation of Data    

1.1       Introduction                                                                 32

1.2       Analysis of Data                                                           32

1.3       Test of Hypothesis                                                        40

1.4       Discussion of Findings                                                42

 

CHAPTER FIVE    

5.1       Summary                                                                      43

5.2       Conclusion                                                                   44

5.3       Recommendation                                                         44

Bibliography                                                                 46    

          Questionnaire


CHAPTER ONE

INTRODUCTION     

Corporate Governance can be defined as the system by which companies are directed and controlled. Statuary control of corporate governance has been with us for a long time and has increased overtime. Corporate Governance is the system by which companies are directed and managed in the best interest of the owners and investors. It refers to the role of the board of directors, executives and non executives. Shareholders right and other actions taken by shareholders to influence corporate decisions.

 

Corporate Governance covers all the general mechanisms by which management are led to act in the best interest of the companies’ owners.

 

According to Piplock (2004) “Corporate governance is the set of rules and practices that government relationship between the managers and shareholders of corporations as well as other stakeholders like employee creditors, tax authorities, trade unions, suppliers and other public authorities.

 

THE ESSENCE OF GOOD CORPORATE GOVERNANCE                    

1.           Corporate governance aims to promote culture in which directors will give privacy to the ethical pursuit of shareholders best interest.

2.           Corporate governance allows a review of audit regulation corporate disclosure framework and shareholders participation to improve the accountability and transparency of companies.

3.           It ensures that audit committee assist the board of directors in its oversight of the integrity of the financial statement of the company, as well as compliance with legal and regulatory requirement and the performance of the company’s internal audit function.

4.           It renders companies to be more credible, domestically and internationally, and ensure managerial system that promote creative and progress entrepreneurship.

5.           Corporate governance helps to maximize corporate value by enhancing the transparency and efficiency of corporation for the future.

6.           The role of corporate governance is to prevent expropriation to investors by managers.

7.           Good corporate governance would prevent theft and fraud thought mechanisms designed by the board and management.

8.           Corporate governance deals with the ways providers of finance to companies assure themselves of getting a return on their investment.                                

STRATEGIC MANAGEMENT IN CORPORATE GOVERNANCE

Strategic management is the process of making and implementing strategic decisions or corporate decision it is about the process of strategic change (Adeleke, Ogundele and Oyenuga 2004).

Bowman and Asch (1987) define it as the match an organisation makes between its own resources and threats, risks and opportunities created by the external environment in which it operates. Strategy can be seen as the key link between what an organisation wants to achieve its objectives and policies adopted to guide its activities and plans for achieving those goals stated in a way as to define the business the organisation is engaged or is to be engaged in.

 

The importance of strategic management within he framework of Corporate Governance are:

(1)         The concept of strategy is assumed to be concerned with the organisation as a whole.

(2)         It is concerned with the long-term direction of an organisation.

(3)         It is distinguished from operational matters which are concerned with the day-to-day aspects of running an organisation.

(4)         The skills of strategic management are considered to be a high order and often assumed to be found at the senior levels within the organisation.

 

Strategic decisions are concerned with the following issues.

2.           The scorp of the organizational activities e.g market to serve and in which areas.

3.           How an organisation responds to its external environment.

4.           The long-term direction of an organisation rather than the day-to-day issues.

5.           Matching the organisation activities with it resources capabilities.

 

THE PRINCIPLES OF CORPORATE GOVERNANCE             

The following could serve as basic principles of corporate governance to be adopted.

1.           Lay solid foundation for management and oversight.

2.           Structure the board to add value.

3.           Promote ethnical and responsible decision making.

4.           Safeguarding the integrity of financial reporting

5.           Making continuous, timely and balanced disclosure to Stock Exchange.

6.           Respect the right of shareholders.

7.           Recognize and manage risk

8.           Encourage enhanced performance  evaluation.

9.           Remunerate fairly and responsibly.

10.       Recognize the legitimate interest of stakeholders.

 

1.2    STATEMENT OF THE PROBLEM                                                                 

Due to the high rate of fraudulent practices and financial mismanagement of funds, assets and information in organisation, so many business including banks have gone down or liquidated. This high rate of mismanagement will be the statement of problem.

      

1.3    OBJECTIVES OF THE RESEARCH WORK                   

The following  are the objectives of the study:

a.           To appraise the impact of good corporate governance on banks and banks profitability.

b.           To appraise the types of decision taken by management towards the profitability of banks.

c.            To appraise the principles of good corporate governance system.

d.           To appraise the responsibilities of key organs of a company.

e.            To make necessary recommendation at the end of the research work.

 

1.4    HYPOTHESIS                     

In our research work, Ho will be taken as the NULL hypothesis.

Ho:    corporate governance does not contribute to the profitability of banks.

Hi:     Corporate governance contributes to profitability of banks.

 

1.5    RESEARCH METHODS     

The research work will involve personal interview conducted in the bank chosen as our case study and the administration of well prepared questionnaires.

 

1.5       SCOPE OF THE RESEARCH WORK     

Our scope of work will be limited to Zenith Bank Nigeria Plc, Head office Victoria Island.

  

1.6       DEFINITION OF TERMS

1.           AUDIT COMMITTEE: A group of people in an organisation who investigate the financial system and other control system within the organisation.

2.           FINANCIAL STATEMENT: A statement of financial information about a business position, profitability and adaptability.      

3.           ENTREPRENEURSHIP: Activities that involves starting and running a business and taking financial risks.

4.           INTERNAL AUDIT: An act of appraising and evaluating the audit work carried out in an organisation.

5.           INVESTOR: A person or a business that puts money into a project or an activities that will yield some benefits in the future.

6.           INVESTMENT: An act of putting money into a project or an activity that will bring some future benefits.

7.           MANAGEMENT: The way in which a business planned, organized and controlled to achieve objectives.

8.           SHAREHOLDERS: These are owners of companies who invest their money in the companies shares.

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