1.
Background
In
today’s global economy, the success of the national economy depends on the
crucial role of organisations’ competitiveness, transparency and governance structure
which operate within her territory, since organisations are the entities that
create economic value (ICAN, 2009). Indeed, the need for trust and transparency
in the governance of corporate organizations has been one of concern for
standard setters all over the world. This need has obviously spurred renewed
interest in the corporate governance practices of modern corporations,
particularly in relation to accountability and economic performance (ibid). The
position above could not be separated from prior submission where Nwachukwu
(2007) emphasize the growing consensus that good corporate governance has
positive link to national economic growth and development. The degree of trust
accorded to the managers of companies by its owners is strengthened through corporate
governance. Directors without corporate governance mechanism may paint
misleading pictures of financial and economic performance of their company to
lure unsuspecting investors. Such window dressed accounts raised concern in the
U.S.A. with the collapse of the energy corporation ENRON in 2001 which filed
for bankruptcy after adjusting its accounts (Demaki, 2011). WORLDCOM, GLOBAL
CROSSING AND RANK XEROX are other companies in the U.S.A with similar problem.
The increasing incidence of corporate fraud relating to exaggerated and
fleeting reports have reinforced the renewed global emphasis on the need for
effective corporate governance. CBN (2006) reported that despite the
significance of good corporate governance to national economic development and
growth, corporate governance was still at rudimentary stage as only 40% of
publicly quoted companies, including banks had recognised corporate governance
in place.
2.
Purpose
The
main objective of this paper is to examine the relationship between corporate
governance and organizational performance. Apart from the general introduction,
the paper presents the conceptual and theoretical framework in Section II.
Section III highlights the methodological framework which governs the study.
Section IV discusses the results of the study while Section V deals with
concluding remarks.
3.
Methodology
Population of Study
and Sample
The population of study consists of
all the employees in the food products companies (Honey well Plc, Dangote Flour
Mills Plc, Dangote Sugar Plc, Northern Nigeria Plc, National Salt Plc and Flour
Mills) operating in Nigeria. 70 key employees across the seven food products
companies were chosen. These are specifically the top employees in the helm of
management.
Sampling Procedure
The study adopts simple random
sampling. Random sampling is used because it is the best single way to obtain a
representative sample from the population. Owojori (2002) stated that random
sampling is one which all the members of the population have an equal chance of
being selected from the sample as every other member and in which the selection
of an individual for the sample did not influence the chances of any other
individual of being chosen.
Method of Data Collection
In carrying out this research work,
data were collected from major primary sources. The primary source of data was
the questionnaire, which was carefully framed and administered to a sample of
70 respondents in the organisations selected. The questions in the
questionnaire are straight forward and close ended questions. Hence, responses
from the questionnaire were on the five point Likert-type questions (agreed,
strongly agreed, disagreed, strongly disagreed and indifferences). The
questionnaire consisted of twenty questions, which were carefully designed to
collect relevant data. The research instrument was pilot studied, by expert
panel including faculty members. The revised instrument and a cover letter were
mailed to the specific individuals who were listed as the financial managers of
the firms sampled. A reminder was sent and non-respondents were followed up
with two additional mailings.
During the first questionnaire
launching, 41 questionnaires were completed and returned. In the second and
third mailings, a total of 23 more completed questionnaires were returned.
Altogether 64 questionnaires were available for data analysis.
Method of Data Analysis
Based on the chosen sampling
technique and the nature of data collected from the questionnaire, the study
adopts parametric test of data analysis. In specific terms, the study utilized
Karl Pearson’s Product Moment Correlation and Regression analysis respectively
with a value of 0.05 (level of significance) that corresponds to a 95% confidence
level.
Test of Hypotheses
Following from the objectives of
the study, the following hypothesis were tested:
Hypothesis I
H0: There is no significant relationship between
corporate governance and organizational performance.
H1: There is significant relationship between corporate
governance and organizational performance.
Hypothesis II
Ho: There is no significant positive correlation
between the degree of relationship of corporate governance and organizational
performance
H1: There
is significant positive correlation between the degree of relationship of
corporate governance and organizational performance
4.
Conclution
The study examined the
relationship between corporate governance and the performance of organizations
from various perspectives: better decision making, effective asset management,
better competitive advantage, an improvement in level of confidence, among
others. It was discovered that the adoption of good corporat governance
practices enhances transparency of company’s operations, ensures accountability
and improves firm’s profitability. It also helps to protect the interest of the
shareholders by aligning their interest with that of the managers. The results
show that generally corporate governance has positive impact on all the
performance indicators of an organization.
Furthermore, the performance of a
company is influenced by other factors than just good corporate governance. The
social, legal, economic and the political environment are equally important. It
is therefore suggested that future research should consider some of these
factors in exploring the impact of corporate governance on firm performance.
However, the above mentioned constraint will not invalidate the findings of the
study but rather pave way for future research on the concept and any related
topic.
Sumber : http://www.ijhssnet.com/journals/Vol_4_No_7_1_May_2014/22.pdf
