Corporate Governance And Its Impact On The Management Of MTN Mobile Communication Nigeria Ltd. Kaduna Main Branch

Corporate Governance And Its Impact On The Management Of MTN Mobile Communication Nigeria Ltd. Kaduna Main Branch
Abstract
This study examined the corporate governance and its impact on the management of MTN Mobile Communication Nigeria Limited Kaduna main branch. Research questions guided the study. A survey method was used for this study. The population consisted of all the entire telecommunication industry in Nigeria out of which MTN Mobile Communication Plc Kaduna with a total population of twenty five (25) persons was selected as the sample size of the study. A questionnaire developed by the researcher based on liker 5 point scale was used for the study. Mean scores and frequencies were used to analyze the data based on the research questions. Research results shows that internal and external mechanism of corporate governance are used to regulate the performance of MTN. The control mechanism put in place by MTN include internal and external auditing as well as board of director monitoring and balance of power. The systemic problems militating against corporate governance include high cost of monitoring, inadequate supply of accounting information to shareholders.
Table of Contents
- Title page
- Declaration
- Approval Page
- Dedication
- Acknowledgment
- Abstract
- Table of Contents
Chapter One:
Introduction
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Significance of the Study
- 1.5 Research Questions
- 1.6 Scope of the Study
- 1.7 Definition of Terms
Chapter Two:
Literature Review and Conceptual Framework
- 2.1 Introduction
- 2.2 Concept of Corporate Governance
- 2.2.1 Principles of Corporate Governance
- 2.2.2 Parties to Corporate Governance
- 2.2.3 Ownership Structures and Elements in Corporate Governance
- 2.3 Theoretical Framework
- 2.3.1 Agency Theory
- 2.3.2 Stewardship Theory
- 2.3.3 Stakeholder Theory
- 2.3.4 Institutional Theory
- 2.4 Empirical Literature Review on the Impact of Corporate Governance on Firm Performance
- 2.4.1 Corporate Governance and Performance
- 2.4.2 Corporate Ownership and Performance
- 2.4.3 Corporate Governance and Ownership Structure
- 2.5 Summary
Chapter Three:
Research Methodology
- 3.1 Introduction
- 3.2 Population and Sample Size
- 3.3 Source of Data Collection
- 3.4 Method of Data Collection
- 3.5 Method of Data Analysis
- 3.6 Justification
- 3.7 Summary
Chapter Four:
Data Presentation and Analysis
- 4.1 Introduction
- 4.2 Respondent Characteristics
- 4.3 Data Analysis
- 4.4 Discussion of Findings
- 4.5 Summary of Findings
Chapter Five:
Summary, Conclusion and Recommendation
- 5.0 Introduction
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
- 5.4 Limitation of the study
- Bibliography
- Appendix
Chapter One
Introduction
1.1 Background of the Study
Corporate Governance is a number of process, customers, policies, laws and institutions which impacts on the way a company is controlled. An important theme of corporate governance is the nature and extent of accountability of people in the business and mechanisms that try to decrease the principal agent problem (Wikipedia, 2011).
Corporate Governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customer and communities affected by the corporation’s activities. Informal stakeholders are the board of directors, executives and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-tem success it is intended to increase the confidence of shareholders and capital market investors.
The World Bank (2009) states that corporate governance comprises two mechanisms, internal and external corporate governance. Internal corporate governance, giving priority to shareholder’s interest, operated on the board of directors to monitor top management. On the other hand, external corporate governance monitors and controls manager’s behaviors by means of external regulations and force, in which many parties, such as suppliers, debtors (stakeholders), accountants, lawyers, and providers of credit and investment bank.
In the past, so many corporate organizations have been caught of getting involved in unethical practices, for example the discovery of financial scam by the Central Bank of Nigeria after the consolidation exercise, involving seven top bank executives in Nigeria, which puts the credibility of their corporate image under suspicion, which further shocking investors confidence. Consequently, corporate governance mechanism has been a crucial issue discussed again.
It is against this background that the researcher see the subject matter; corporate governance and its impact on the management of MTN Mobile Communication Limited, Kaduna main branch as an issue worthy of being investigated.
1.2 Statement of Problem
In the past, so many organizations in Nigeria have been involved in unethical practices, which puts the credibility of their corporate image doubt. As such MTN Mobile Communications just like other telecommunication company have been constraint with issues arising form customer’s complaint of high tariffs, exploitations of workers by using contract staff as against direct engagement of workers that would be remunerated according to their condition of service. Previous researches into the subject has brought to light the poor governance of so many companies with indebted accounts in Nigeria economy. Their accounting systems did not reflect the companies financial status. A typical example is the financial scam of Oceanic and Intercontinental Bank after the consolidation. Most management of such outfits were not accountable to stakeholders of the companies. Besides, the counts and the regulatory agencies were short of authority, corruption and kickbacks were part of the system in the companies. The poor governance practices led to the collapse of so many companies in Nigeria. Hence the need to study corporate governance and its impact on the management of MTN Mobile Communication Kaduna main branch.
1.3 Objective of the Study
The main objective of the study is to examine the corporate governance and its impact on the management of MTN Mobile Communication. The specific objectives are:
- To examine the effect of corporate governance on the performance of MTN.
- To examine the internal and external corporate governance control mechanism in MTN.
- To identify the systemic problems of corporate governance in MTN.
- To proffer workable solutions to the identified problem of corporate governance in MTN.
1.4 Significance of the Study
The study will be significant to MTN Mobile Communication especially as they utilize the findings of this research in enhancing policy governance in their organization. The study will also add to the existing knowledge on the subject matter and will also be a reference material for further research on corporate governance.
1.5 Research Questions
The central research question is: What is the impact of corporate governance on the management of MTN Mobile Communication? The specific questions are:
- How does corporate governance affect the performance of MTN?
- What are the internal and external corporate governance control mechanism in place in MTN?
- What are the systemic problems militating against corporate governance in MTN?
- What are the solutions to such problems?
1.6 Scope of the Study
The study covers the examination of the impact of corporate governance on MTN Mobile Communication. The collection of empirical data is limited to MTN Mobile Communication Kaduna main office. The study covers a time from 2006 – 2011.
1.7 Definition of Terms
Corporate Governance:
This is relationship that exists between the different participants, and defining the direction of the firm.
Corporation:
This refers to corporate entity or a body by means of which capital is acquired, used for investing in assets producing goods and services.
Shareholders:
People who have invested in a company through subscribing to the company’s stock.
Board Structure:
Management at the top comprising of board of directors.
Ownership Structure:
Shareholders and directors.
CEO:
Acronym for Chief Executive Officer.
MTN:
Mobile Telecommunication Nigeria
AGM:
Annual General Meeting
BOFID:
Banks and Other Financial Institution Decree
CAC:
Corporate Affairs Commission
CAMD:
Company and Allied Matters Decree
CBN:
Central Bank of Nigeria
DPC:
Development Policy Centre
FOS:
Federal Office of Statistics
IAS:
International accounting standard
ISD:
Investments and Securities Decree
MENA:
Middle East and North Africa
NAICOM:
national insurance commission of Nigeria
NICON:
National Insurance Corporation of Nigeria plc
NEPA:
National Electric Power Authority
NDIC:
Nigerian Deposit Insurance Corporation
NNPC:
Nigerian National Petroleum Corporation
NITEL:
Nigerian Telecommunications Plc
NSE:
Nigerian Stock Exchange
OECD:
Organisation For Economic Cooperation And Development.
PLC:
Public Limited Company
SEC:
Securities And Exchange Commission
SOE:
State Owned Enterprises
TCPC:
Technical Committee On Privatization And Commercialization
Chapter Five
Summary, Conclusion and Recommendation
5.0 Introduction
This chapter gives the summary of the entire survey as well as the conclusion. The chapter equally shows recommendation given in time with the findings of the survey.
5.1 Summary
This study examined the corporate governance and its impact on the management of MTN Mobile Communication Nigeria Limited Kaduna main branch. Research questions guided the study.
A survey method was used for this study. The population consisted of all the management staff of MTN Mobile Communication Plc Kaduna with a total population of twenty five (25) persons. The entire 25 person were selected for the study. A questionnaire developed by the researcher based on liker 5 point scale was used for the study. Mean scores and frequencies were used to analyze the data based on the research questions. Research results shows that internal and external mechanism of corporate governance are used to regulate the performance of MTN. The control mechanism put in place by MTN include internal and external auditing as well as board of director monitoring and balance of power. The systemic problems militating against corporate governance include high cost of monitoring, inadequate supply of accounting information to shareholders.
5.2 Conclusion
Based on the findings, it is clear that corporate governance control mechanism has a positive and significant impact on the performance of MTN sequel to the control of internal monitoring procedures of board of directors and internal auditors as well as the external control of third parties such as external auditors and regulatory agencies. The observed results are evident that there is a need to foster good governance practices in the Telecommunication industry to improve the firm performance. When the firms allow sufficient freedom and exercise power to the boards to take decisions towards their growth and innovation, it seeks to enhance performance of the company. The investors are also driven to invest in well managed firms as they seek to protect the interests of investors and other stakeholders. The markets respond positively to better governed firms as the progress of the firm depends upon the adoption and implementation of good governance practices. Strong corporate governance is indispensable for the capital markets and is significant for the corporate success as well as for the social welfare.
5.3 Recommendations
The following recommendations are made based on the research findings so as to facilitate the improvement of corporate governance in MTN:
- Board of Directors of MTN should ensure that adequate information are furnished to shareholders and the general public for proper accountability and fairness to shareholders. This performance evaluation of MTN.
- Every member of board of directors of MTN should have the power to assess the Chief Executive Officer’s performance. The lead director should synthesis the assessments and feel the trend of thoughts. Alternatively, a small group/committee of independent directors also may do the synthesis.
- A feedback is given to the CEO confidentially and in a manner that is suitable both to the directors and the CEO.
- Shareholders of MTN should propose induction of majority of external director. The following are the significant committees which should be constituted with external directors only: the audit committee, and the compensation committee.
- All the members of board of directors apart from the Chief Executive Officer of MTN should be external directors.
- Members of board of directors should have meaningful ownership in the corporations o that they are the natural allies of the owners, the shareholders.
5.4 Limitation of the Study
As with any research, this study has a few limitations. The following are the most pertinent. First, the disclosure index was developed based on the local corporate governance guidelines as well as the corporate governance guidelines of other countries, hence, does not reflect their level of importance as perceived by financial information users. Second, the results would have shown higher values if more or less items were included. The results would also have been higher if the disclosure index was developed based on the local corporate governance guidelines only, but, this option is unsuccessful since the local corporate governance guidelines is insufficient to develop a successful disclosure index. With these caveats in mind, much caution should be exercised when interpreting the results.


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