Corporate Governance and Agency: The Nigerian Banking Sector Experience

Abstract

Corporate governance has ignited heightened interest with the collapse of key companies round the world. The demise of Enron, Arthur Anderson, Health Smith and others took the entire globe by surprise. All the stakeholders are now very interested in setting standards and enacting laws that address current issues to protect unsuspecting investors. In this regard, the United States Congress enacted the Sarbanes-Oxley Act of 2002 to guide the practice of corporate governance particularly in the public corporation of the country. This paper thus examined the issue of agency as it relates to corporate governance. It attempted to determine the extent to which the directors and management of banks are in congruent with this role. It also assessed the impact of agency on corporate governance in the Nigerian banking sector. In carrying out this study simple percentages through the aid of frequency distribution were used to describe the data collected. T-test statistic was employed to analyse the data. and in conclusion, the study was of the view that agency impacts negatively on corporate governance practices in Nigeria. The study therefore recommended that the banking sector should endeavour to entrench effective corporate governance that will compel the directors and the management to be truly and genuinely accountable to the stakeholders. It also recommended that the Central Bank of Nigeria should strengthen its enforcement mechanisms such that there will be total transparency and full disclosure of all material transactions to the stakeholders and the regulatory authorities. 

Keywords: Corporate Governance, Agency, Banking Sector, Directors, Transparency, Disclosure Stakeholders, Management