Corporate Governance: The Sustainability Quest

*Isaac Onyeyirichukwu Chukwuma, Fidelis Odinakachukwu Alaefule and Njideka Helen Jideofor*

#### **Abstract**

In recent times, the concept of corporate governance has become a topical interest to both academia and industry, the focus of attraction has mostly been on the need to understand its potency in advancing a corporation's ultimate interest, and hence the necessity for this study. This study aims to examine corporate governance. The study utilized a narrative literature review methodology to examine the concept of corporate governance, essence of corporate governance, scope of corporate governance, principles of corporate governance, internal corporate governance controls, external corporate governance controls, merit of corporate governance, and stewardship theory perspective to corporate governance. The study finally made postulations on the prospect of corporate governance.

**Keywords:** corporate governance, stewardship theory, sustainability

#### **1. Introduction**

The evolving of the concept of corporate governance started from the Greek term "kyberman" which denotes to guide, steer or govern; from which it transcends to a Latin concept "gubernare," and "governer" from a French perspective. It generally portrays the decision-making processes and execution strategies; nonetheless it connotation could change with regards to the peculiarity of an organization [1].

Cadbury [2] defines corporate governance (CG) as a structure by which organizations are controlled and directed, Obodo [3] posits that CG involves the balance of power with which the organization is directed, managed, supervised and held accountable. CG, to an extent, is a tool through which outside investors secure themselves against expropriations by the insiders and management [4]. Another competing definition is that CG is an interplay of the relationship between company management, shareholders, board, and auditors, etc. [5]; hence, it is ultimately about regimes of accountability [6]. The basis of CG does not end at how organizations are directed and managed but includes how to ensure and promote accountability and responsibility to all stakeholders; therefore, CG will always be in existence as long as the corporate structure is undermined, and the managers and investors experience conflict [7].

Ngozi and Raymond [8] posit that CG is perceived as having significant implications for the growth prospects of an economy, because best CG practice reduces risks for investors, attracts investment capital and improves the performance of organizations [9]. Effective CG is critical to securing corporate accountability,

advancing the reliability and validity of financial information, and ensuring the efficiency and integrity of capital markets, with a positive effect on investor confidence [10].

CG in Nigeria is influenced by both internal and external factors comprising of various institutions and individuals charged with the responsibility to ensure effective management, control and accountability of public organizations [11]. The evolution and principles of the CG system in Nigeria were covered by the Companies and Allied Matters Act (CAMA) and improved further in the various Codes of Corporate Governance, the CG situation in Nigeria does not represent a complete lack or absence of structures, legislations and regulations rather, the ineffectiveness of the legislations and structures to effectively ensure compliance and enforcement [3]. CG can be identified through acceptable principles which consist of guidelines for decision-makers to enable them competently manage the economic and human resources in an open, accountable, transparent and lawful manner [12].

In recent times, unpleasant realities in the business world have questioned the credibility of CG. These unpleasant realities, as evidenced by the collapse of the stock market, uncovering of flagrant abuse of regulations practices, and high incidence of corruption in the economy [13]. Oyebode [14] posits that the massive fraud "cooking" of books in organizations not to mention insider dealings and compromised boards in many organizations, as well as spineless shareholders' associations', committees for audit and ineffective Annual General Meetings, imply the collapse of CG, and the necessity for a viable CG. Theses unpleasant realities were addressed via CG decisions (i.e. consolidation, mergers and acquisition, etc.) [15], the efficacy of the CG system in limiting these realities [16], have heightened the interest in understanding CG, and this the study aims to accomplish.

The remaining section of this paper will be divided into the following heading; methodology, concept of CG, essence of CG, scope of CG, principles of CG, internal CG controls, external CG controls, merit of CG, stewardship theory perspective to CG, and conclusion and prospect of CG.

#### **2. Methodology**

The narrative literature review methodology was utilized for this study. Its rationale is anchored on the significant scientific role it plays; as it is a critical element of most theses, empirical articles, book chapters, and grant proposals. It engages concepts in a much broader and abstract manner, and is most ideal when aligning diverse author's inputs, either for the objective of interconnection or reinterpretation [17]; it aids in understanding the body of knowledge on a specific concept, which offers valuable integration and overviews [18].

#### **3. Concept of corporate governance**

CG reveals the allotment of responsibilities and rights among diverse policymakers in an organization (i.e. shareholders, managers, board members, etc.) and outlines the values, operation modes, and norms for making and executing decisions on the affairs of the organization [5]. CG also connotes the structure of norms, processes, systems and relationship through which authority is activated and engaged to optimally achieve the goals and objectives while monitoring performance and compliance in the organization [5]. Cochran and Warwick [19] define CG as an encompassing term that addresses particular issues resulting from interactions among management, shareholders, board directors and other corporate stakeholders.
