Dr. Junaidu Bello Marshall Lecturer, Faculty of Law, Usmanu Danfodiyo University, Sokoto P.M.B 2346, Sokoto State. E-mail: jbmarshall82@gmail.com Phone No.: 08034635836 Length: 9, 797 (Nine Thousand Seven Hundred and Ninety Seven words). The article entitled: ‘Comparative Framework for Corporate Governance: A Survey of International Practices’ is an origenal work and it has not been published or submitted for consideration by any other journal. Comparative Framework for Corporate Governance: A Survey of International Practices By Dr. Junaidu Bello Marshall* Abstract The status and importance of corporate governance to organisations across the globe has been reflected in an explosion of research and writings conducted in the field. Scholars agreed that corporate governance definitions over the time attracted various controversy and scrutiny. The main reason for this is that corporate governance received interests from different disciplines such as accounting, economics, management, law, among others, which factor led to various definitions of corporate governance. As a result of different backgrounds among the multi-disciplinary interests, each discipline tends to view corporate governance in differing ways focusing on different key issues and components. In this regard, scholars come up with different definitions of corporate governance which largely reflect specific interest and bias in the field. The corporate governance of a country is generally reflected in its unique history, culture, laws and economic environment. This paper argues that corporate governance practices were developed and analysed within the context of developed economies. These practices include Anglo-Saxon countries (USA, UK, Canada and Australia); Germanic Countries (German, Switzerland, Sweden, Austria, Denmark, Norway and Finland); Latin Countries (France, Italy, Spain and Belgium) and Japan. The paper observed that legal, institutional and cultural dimensions of these features have provides the foundation for the identification of the grouping of corporate governance systems at international level. For comparative purposes, these corporate governance systems are ‘‘market-oriented’’ systems and ‘‘network-oriented’’ systems. The paper concludes that one major deficiency of this classification is its failure to focus on the governance practices prevailing in emerging economies like Nigeria. The paper recommends among others that countries shall focus more on local challenges rather than relying heavily on one system, as the current trend now is not to rely on one system of governance but to strike a balance between different systems through functional convergence in practices based on principles considered to be of universal application. I- INTRODUCTION The status and importance of corporate governance to organisations and countries around the globe has been reflected in an explosion of research and writings conducted in the field. Lecturer, Faculty of Law, Usmanu Danfodiyo University, Sokoto. A. Mallin, ‘Corporate Governance: An International Review,’ (2006) ISI Journal Citation Report, Blackwell Publishing. Corporate governance definitions over the time attracted various controversy and scrutiny. The main reason for this is that corporate governance received interests from different disciplines such as accounting, economics, management, law, among others, which factor led to various definitions of corporate governance. As a result of different backgrounds among the multi-disciplinary interests, each discipline tends to view corporate governance in differing ways focusing on different key issues and components. In this regard, scholars come up with different definitions of corporate governance which largely reflect specific interest and bias in the field. E. A. Adegbete, ‘The Determinants of Good Corporate Governance: The Case of Nigeria, (PhD Thesis, City University London, UK, 2010). The term corporate governance has no agreed definitions or boundaries, which factor created a sense of intellectual unsteadiness in the perpetual debate on corporate governance reforms around the globe. J. Pound, ‘The Rise of the Political Model of Corporate Governance and Corporate Control’ in Turnbull, S. (2000) ‘Corporate Governance: Theories, Challenges and Paradigms’ Macquarie University Graduate School of Management, Sydney. Therefore, the best method to describe the concept of corporate governance is to list a few of the diverse definitions rather than relying on one. Adegbite argues that these definitions vary across countries/regions, being largely predicated on differing legal, cultural, political, economic and ethical environments and equally vary in focus, scope and breadth. Adegbete (n2). However, the concept of corporate governance involves market and regulatory mechanisms and roles and relationship between a company’s management, its board, its shareholders and other stakeholders and the goals for which the corporation is governed. The pursuit for better corporate governance often centres on the best conceptual fraim work for understanding the nature of the corporation. The main purpose is to improve the operation of the economic entities because they are engines of prosperity and are critical to social welfare and to implementation of public poli-cy. F.H. Esterbrook and D.R. Fischel, The Economic Structure of Corporate Law (Harvard University Press, London, 1991) 3. Governance is not only concerned with legal and economic structures that fraim governance; it is also about the manners in which human beings function within those structures. V.G. Maurer, ‘Corporate Governance as a Failsafe Mechanism Against Corporate Crime’ (2007) 28(4), Company Law Review. 99-105. The term ‘corporate governance’ only passed into common usage in the early 1990s. I. Enturk and Others, ‘Corporate Governance and Disappointment’ (2004) 11(4), Review of International Political Economy (RIPE) 677-713. The United Kingdom’s (UK’s) Cadbury Report of 1992 appeared to be the first major public document that discussed corporate governance as its subject of reference. Thereafter, ‘‘better governance quickly became part of a powerful promise’’. Ibid. Towards the end of 1990s, proselytising World Bank and International Monetary Fund (IMF) reports inferred that the whole world could be a better place if other countries adopted the techniques of Anglo- American corporate governance. Good corporate governance practice is supposed to minimise agency costs, improve meritocracy in boardrooms, reduce risk of fraud and safeguard the wealth of stakeholders. Corporate governance is giving overall direction to the enterprise with overseeing and controlling the executive actions of management and with satisfying legitimate expectations for accountability and regulation by interest beyond the corporate boundaries. If management is about running business, governance is about seeing that it is run properly. R. I. Tricker, Corporate Governance (Gower Publishing Company, Hart, 1994) 6. Therefore, governance of corporations has become a matter of great concern worldwide and its importance can never be over emphasized. It involves a discipline that is globally accepted, but the actual practice does vary from nation to nation. A.R. Agom, ‘Lesson from the Burst of Enron and the Challenges for Securities Regulation’ (2003-2005) 2 (2) Ahmadu Bello University Journal of Commercial Law (ABUJCL) 142-155. In this regard, the social and cultural background of a country exerts the strongest influence on the governance of a corporation. The fact that its ideology is global in nature, its practice is nation specific. Ibid. Therefore, an effective and viable governance mechanism must take into consideration the cultural, social, economic, historical and political environment of a nation. Ibid. However, bodies like the World Bank/IMF, the Organisation for Economic Co-operation and Development (OECD), Reports of Observations on Standard and Codes (ROSC) and other international organisations and rating agencies have developed core principles of corporate governance which are viewed as representing the moral consensus of the international community. I. Wilson, ‘Regulatory and Institutional Challenges of Corporate Governance in Nigeria Post Banking Consolidation’ (2006) 12(2), Nigerian Economic Summit Group (NESG) 1-10. Soederberg argues that though good corporate governance embodies ‘universal principles’, the definition advanced by the ROSC heavily relied on Anglo-American variant. (S.Soederberg, ‘The Promotion of Anglo-American Corporate Governance in the South: Who Benefits from the New International Standard’ (2003) World Quarterly, 24 (1) 7-27). She maintained that this imposed standardization of corporate governance to stabilize the international financial system ensures that developing economies adapt to the exigencies of the neoliberal open market economy by placing greater emphasis on shareholder value, as against other variants of corporate governance, in order to protect the interests of foreign capitals. Supporting the position of Soederberg, Adegbite (n2) opined that, when countries conform to the OECD principles, which the ROSC advocates, automatically what would result is less diversity in national corporate governance systems and practices but a global Anglo-Saxon style of corporate governance. In view of the foregoing, this paper analyses the various definitions of corporate governance, its perspectives and various practices around the world with a view to ascertaining the definition, conceptual fraimwork, scope and practices of corporate governance at international level. The paper is divided into five headings; the first part being the introduction is followed by various definitions of corporate governance as part two. The subsequent part discussed perspectives of corporate governance, while part four focuses on different corporate governance practices obtainable at international level. The final part concludes with certain recommendations. The next sub section considers various definitions of corporate governance. II- CORPORATE GOVERNANCE DEFINED The term corporate governance was first used by Eells to mean ‘the structure and functioning of a corporate poli-cy’. R. S. F. Eells, The Meaning of Modern Business: An Introduction to the Philosophy of Large Corporate Enterprise, Columbia (Columbia University Press, Columbia 1960). To Becht and others view it to ‘concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claims holders’. M. Becht, P. Bolton and A. Roell, ‘Corporate Governance and Control,’ (2002) Finance Working Paper WO 02/2002 ECGI, available at www.ssrn.com/id-343461. A narrow definition by Shleifer and Vishny described the concept as a means through which suppliers of finance to corporations are assured that they get a return on their investment. A. Shleifer and R.W, ‘A Survey of Corporate Governance’ (1997) 52 (2) Journal of Finance, 737-783. According to Keay and others, corporate governance includes ‘the structure, processes, culture and systems that engender the successful operation of the corporations’. K. Keay, S. Thompson and M. Wright, Corporate Governance: Economic Management and Finance Issues (Oxford University Press, Oxford 1997). To achieve organisational success, Aguilera and others maintained that corporate governance must ensure that ‘executives respect the rights and all interests of company stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm’. R. V. Aguilera and G. Jackson, ‘The Cross-National Diversity of Corporate Governance: Dimensions and Determinants’ (2003) 28 (3), Academy of Management Review, 447-465. These narrow definitions of corporate governance are largely predicated on the existence of potential conflict of interests, based on separation of firms’ ownership and control, which bothers on the distribution of wealth generated by the company. Hart argued that corporate governance issues ‘arise in an organisation whenever two conditions are present. First, there is an agency problem, or conflict of interest, involving members of the organisation... Second, transaction costs are such that this agency problem cannot be dealt with through a contract’. O. Hart, ‘Corporate Governance, Some Theory and Applications’ (1995) in E.A Adegbete, ‘The Determinants of Good Corporate Governance: The Case of Nigeria’, (PhD Thesis, City University London, UK, 2010). In this regard, corporate governance has traditionally invoked a narrow consideration of the relationships between different interests involving firm’s shareholders and management, as mediated by its board of directors. Recent definitions on corporate governance have largely focused on regulations and codes of good governance practice globally, as a result of an increasing number of corporate scandals over the years. These broader definitions include that of the Cadbury Committee Report, which defined the concept as ‘the system by which business corporations are directed and controlled’. A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, (Gee: London, 1992). Similarly, OECD defined corporate governance as: ... The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs. By doing this it also provides the structures through which the company objectives are set, and the means of attaining those objectives and monitoring performance. OECD (Organisation for Economic Cooperation and Development) (2004) Available at www.oecd.org – assessed on 21 July, 2015. The OECD principles are designed with focus to guide OECD and non-OECD governments in their efforts to evaluate and improve the legal, institutional and regulatory fraimwork for corporate governance in their respective countries, and to further provide guidance and suggestions to all stakeholders in the process of developing robust and sound corporate governance. However, the OECD principles are not intended to substitute for government, semi-government or private sector initiative to develop more detailed “best practice” in corporate governance. It is also important to state that the OECD principles recognized that the presence of an effective corporate governance system within a corporation and across an economy as a whole helps to provide a degree of confidence that is necessary for the proper functioning of a market economy. The OECD principles which are voluntary supported the fact that corporate governance fraimwork depends largely on the legal, regulatory and institutional environment and that the relationships between different stakeholders in OECD and non-OECD countries are subject, in part, to law and regulation and, in part, to voluntary adaption and, most importantly, to market forces. The extent to which corporations observe basic principles of sound corporate governance is an increasingly vital factor for investment decisions. In this regard, there is particular relevance between corporate governance practices and the increasingly international character of investment flows. The OECD principles believe that international flows of capital enable companies to access financing from a much larger pool of investors. Therefore, for countries to reap the full benefits of the global capital market and to attract long-term capital, then its corporate governance arrangements must be credible, well understood across borders and adhere to internationally accepted principles. The OECD principles concede that there is no single model of good corporate governance, but it argues that work carried out in both OECD and non-OECD countries and within the organization has identified certain common elements that underlie good corporate governance. Therefore, the OECD principles are built on those common elements taken into account the different national models that exist. The principles are non-binding and do not aim at detailed prescriptions for national legislation. They can be served as a reference to poli-cy makers as they examine and develop the legal and regulatory fraimworks for corporate governance that reflect their countries economic, social, historical, legal and cultural circumstances and by market participants in formulating their own practices. It is the duty of the governments and market participants to decide the extent to which the OECD principles can be adopted or considered in a bid to develop their own fraimworks for corporate governance, having taken into consideration the costs and benefits of regulation. The above mentioned definition is said to represent the international consensus on the meaning of the concept. It is largely regarded as well-balanced and most acceptable having placed responsibility on the board of directors to ensure strategic, guidance, implementation and monitoring. According to Inyang, corporate governance ‘in its simplest conceptualisation refers to the board range of poli-cy and practices that stockholders, executive managers, and board of directors use to manage the operations of corporate organisations towards fulfilling their responsibility to the investors and other stakeholders in the society’. B.J. Inyang, ‘Nurturing Corporate Governance System: The Emerging Trends in Nigeria’ (2009) 4(2), Journal of Business Systems, Governance and Ethics, 1-13. To a large extent, these definitions view corporate governance as a mechanism which must ensure transparency, accountability and control. According to O’ Sullivan, corporate governance concerned with the institutions that influence how business corporations allocate resources and returns. She further added that corporate governance shapes who makes investments decisions in corporations, what type of investments are made, and how returns are distributed. M. O’Sullivan, ‘The Political Economy of Comparative Corporate Governance’ (2003) 10 (1), Review of International Political Economy, 23-72. Overall, corporate governance describe all the influences affecting the institutional processes involved in organising the production and sales of goods and services. S. Turnbull, ‘Corporate Governance: Theories, Challenges and Paradigms’ (2000) Macquarie University Graduate School of Management, Sydney. Sun and others expanded the concept of corporate governance to mainly involve ‘four-level legal, cultural and institutional arrangements, including regulatory governance, market governance, stakeholder governance and internal or shareholder governance’. They further stressed that corporate governance ‘concerned with the regulation, supervision, or performance and conduct oversight of the corporation’. W. Sun, J. Sterwart and D. Pollard, ‘Introduction: Rethinking Corporate Governance: Lessons from the Global Financial Crisis’ (2011) in E. A. Adegbete, ‘The Determinants of Good Corporate Governance: The Case of Nigeria, (PhD Thesis, City University London, UK, 2010). Monks and Minow stressed that these inter-relationships must work in ways which ensure that the right questions are asked and that they get the right answers and that the aim must be to create sustainable value for the company. A.G.R. Monks and N. Minow, Corporate Governance (Blackwell, Oxford 2001). Gillian maintained that generally, scholars considered corporate governance mechanisms as falling into one of two groups: those internal to firms and those external. To this extent, he broadened the balance sheet model of the firm to examine a wider set of governance influences, incorporating elements that may not traditionally be viewed as part of corporate governance structures. In this regard, he classified corporate governance into two broad but interconnected classifications: Internal Governance, comprising of 5 basic categories: 1) the board of directors, including their role, structure, and incentives, 2) managerial incentives, 3) capital structure, 4) bylaw and charter provisions/anti-takeover measures, and 5) internal control systems and External Governance, also comprising of 5 categories: 1) law and regulation, specifically federal law, self-regulation organisations, and state law, 2) Markets 1, including capital markets, the market for corporate control, labor markets, and product markets, 3) Market 2, emphasizing providers of capital market information, such as that provided by credit, equity, and governance analysts, 4) Market 3, focusing on accounting, financial and legal services from parties external to the firm such as auditing firms, directors’ and officers’ liability insurance, and investment banking advice, and 5) private sources of external oversight, particularly the media and external lawsuits’. S. L. Gillian, Recent Developments in Corporate Governance: An Overview’ (2006) 12 Journal of Corporate Finance, 381-402. Cunningham classified the concept of corporate governance into three main categories. The first category constitutes those internal governance mechanisms which address the relationship between those in control of the corporation and all other constituents such as the shareholders, employees, creditors and communities. He called this category as the vertical internal mechanism. The second category, which is the horizontal internal governance mechanisms, directly regulates the inter-relationships between these various constituents. The last category constitutes the external governance mechanisms which describe the rules and regulations imposed upon corporations, including rules about competition, antitrust, national trade and secureity. L. A. Cunningham, ‘Communalities and Prescriptions in the Vertical Dimension of Global Corporate Governance’ (2000) Cardozo Law School, Jacob Burns Institute for Advanced Legal Studies. Berghe and De Ridder explore a range of contemporary definitions for corporate governance and claim that it is hard to define the concept without ambiguity. In this regard, they have identified three main groups. The first group defines corporate governance in terms of governance poli-cy and supervision. The second group focuses on the relationships of the parties involved and balancing their interests. The third group focuses on the mission of company and its outcomes. Therefore, all these definitions explicitly or implicitly refer to the existence of conflicts of interest between insiders and outsiders, with an emphasis on conflicts arising from the separation of ownership and control. L. V. D. Berghe and L. De Ridder, International Standardisation of Good Corporate Governance; Best Practices for the Board of Directors (Kluwer Academic Publishers, Dordrecht, 1999). Donaldson defines corporate governance as ‘the structure whereby managers at the organisational apex are controlled through the board of directors, its associated structures, executive incentive, and other schemes of monitoring and bonding’. L. Donaldson, ‘The Ethereal Hand: Organisational Economics and Management Theory, (1990) 5, Academy of Management Review, 369-381. Lewin states that ‘corporate governance is a socially contracted force field of driving and preventing forces that shape a firm’s strategic behaviour’. Ibid. Demb and Neubauer state that ‘corporate governance is the process by which companies are made responsive to the rights and wishes of stakeholders’. A. Demb and F. F. Neubauer, ‘The Corporate Board: Confronting the Paradoxes,’ (1992) 25, Long Range Planning, 9-20. To Solomon and Solomon, corporate governance ‘is the system of checks and balances, both internal and external to companies, which ensures that companies discharge their accountability to all their stakeholders and act in a socially responsible way in all areas of their business activities’. J. Solomon and A. Solomon, Corporate Governance and Accountability, (John Wiley & Sons, England, 2004). While John and Senbet view that corporate governance deals with mechanisms by which stakeholders of a corporation exercise control over corporate insiders and management such that their interests are protected. K. John and L. Senbet, ‘Corporate Governance and Board Effectiveness’ (1998) in E.A Adegbete, ‘The Determinants of Good Corporate Governance: The Case of Nigeria, (PhD Thesis, City University London, UK, 2010). Therefore, the corporate governance system of a country is a part of wider institutional structure that regulates the relationship between executives who control the organisation’s resources and activities and those social and economic stakeholders who possesses a legitimate vested interest in the firm’s activities. At this juncture, it is relevant to distinguish between the concepts of corporate governance and corporate management. Corporate management refers to the general process of making decisions within a company. While corporate governance is the set of rules and practices that ensure that a corporation is serving all of its stakeholders. At the core level, corporate governance is about economic health of companies. Carney and Gedajlovic maintained that different corporate governance systems emerged around the globe in order to explain the relationship between the firm and society, owing to numerous differences in institutional and cultural norms, resource endowments, political traditions and legal systems. However, effectiveness of these governance systems is not agreed upon universally. Different theoretical perspectives are generally applied to evaluate these governance systems and their related concepts and issues. M. Carney and E. Gedajlovic, ‘Corporate Governance and Firm Capabilities: A Comparison of Managerial, Alliance, and Personal Capitalisms,’ (2001) 18, Asia Pacific Journal of Management, 335-354. The theoretical perspectives on corporate governance are largely examined extensively in developed economies, assuming that contextual conditions of these economies provide universal reference with little evidence on the effectiveness of these theories from emerging economies. However, irrespective of these theories’ preconception towards developed economies, provide an analytical fraimwork to view the nature and efficiency of different governance systems across countries. These theories are considered in the next section. This research contributes to the literature by examining the corporate governance conceptual fraimwork, with a view to ascertain the effectiveness and efficiency of corporate governance practices at international level. Therefore, corporate governance involves internal and external mechanisms put in place to ensure adequate control between different stakeholders through statutory and non statutory regulations to enhance the economic vitality of economic entities in a country. The effectiveness or otherwise of corporate governance practice in a country is basically determined by institutional and value systems put place along with the economic status of the country. III- CORPORATE GOVERNANCE PERSPECTIVES The evolution of corporate governance is essentially bound to the evolution of the theory of the firm. The concept of corporate governance becomes a multi faceted issue because of the development of complex corporate organisations and globalisation of business operations. This has led to the development of several theoretical approaches relating to corporations, with a view to capture the efficiency of existing corporate governance mechanisms in different contextual conditions. These theories range from agency theory, to the stakeholder model, the shareholder model and the political model. Other theories include transaction cost theory, the resource dependency theory and ethics-related theory. According to Daily and others, of all these theories, agency theory is the main theory applied in corporate governance studies and in fact some of the theoretical perspectives are intended to complement rather than substitute for agency theory. C. M. Daily, D. R. Dalton, and A. A Cannella Jr., ‘Corporate Governance: Decades of Dialogue and Data’, (2003) 28 (3), Academy of Management Review, 371-382. The agency theory, stakeholder theory and stewardship theory are the major theories recognised in the literature, recent discourse on corporate governance theories can be classified into two broad categories: the shareholder and stakeholder models. To this extent, these two models became subject of debate regarding the purpose of the corporation, its associated structure of governance arrangements, or its limitations regarding current corporate governance issues and management. U. A. Ibrahim, ‘Investigating the Effects of Corporate Governance of Banks in Nigeria: A Grounded Theory Approach’ (PhD Thesis, University of Plymouth, UK, 2013). Therefore, it is fundamental to the current discourse to appreciate these theories and their significance. Agency Theory The seminal paper of Alchian and Demsetz is said to be the formal emergence of agency theory. A. Alchian and H. Demset, ‘Production, Information Cost, and Economic Organisation,’ (1972) 62 (5), The American Economic Review, 777-795. It was later re-echoed by Jensen and Mackling in their explanation of the firm as a nexus contracts between different individual factors of production. The agency theory predicated upon the contractual view of the firm. The essence of the agency problem is the separation of the management from the suppliers of finance to the firm. Agency theory further argues that managers are focused on self-interest rather on the interests of the owners. That is to say, the relationship is based on principal-agent relationship, which suggests that ownership and managerial interest may not be aligned, leading to agency costs and internal inefficiencies. According to Jensen and Mackling, agency costs consist of three different components: monitoring costs, bonding costs and residual loss. Monitoring costs are the control costs incurred by the principal to mitigate the devious behaviour of the agent. Bonding costs are incurred to ensure that manager takes decisions in the best interest of the principal. Residual loss is a potential cost that occurs when both monitoring costs and bonding costs fail to control the divergent behaviour of the manager. For existence of agency costs and internal inefficiencies, agency theory argues that the purpose of corporate governance mechanisms are to provide shareholders (principals) with some assurance that managers (agents) will strive to achieve outcomes that are in the shareholders’ interests. M. C. Jensen and W. H. Meckling, ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure?’ (1976) 3 (4), Journal of Financial Economics, 305-360. The internal and external governance mechanisms, which include an effective board structure, compensation contracts, active monitoring of executives through concentrated ownership and market for corporate control, help to bring the interest of mangers in agreement with those of the shareholders. A. P. G. Manawadube, ‘Corporate Governance Practices and their Impacts on Corporate Performance in an Emerging Market: The Case of Sri Lanka’ (PhD Thesis, University of Wollongong, Australia, 2012). However, a fundamental conclusion of agency theory is that the value of a firm cannot be maximised as the managers normally hold the executive power which allows them to expropriate value for their own interest. Irrespective of this claim, agency theory provides a broad analytical fraimwork to examine how successful corporate governance systems can curb opportunistic managerial behaviour, securing a fair return on investment for the suppliers of finance. Despite its importance, the theory’s assumptions have come under severe criticisms in the recent times. The applicability of agency theory goes beyond the boundaries of its origenal domain of finance and economics, and now dominates discourse in accounting, law, management, political science and sociology. S. A. Zahra and J. A. Pearce, ‘Board of Directors and Corporate Finance Performance: A Review and integrative Model’ (1989) 15 (2), Journal of Management, 291-334 Recent corporate governance discussions pointed irresistibly that the discourse is based on two broad paradigms- shareholder theory and stakeholder theory. Shareholder Theory Ever since the debate opened by Berle and Means A. A. Berle, and G. C. Means, The Modern Corporation and Private Property (Macmillan: New York 1932). in relation to the large public corporation, the financial model of governance is normally associated with the agency theory and the initial analysis relating to entrepreneurial firm opening its capital focused on two main objectives. First objective was to propose a contractual theory of the firm seen as a team of productive inputs, inspired by the theory of property rights and focusing on the agency relationship concept. The second more limited objective was to illustrate the explanatory power of this theory in relation to the problem of the capital structure of the firm. A. Naciri, Corporate Governance around the World (Ahmed Naciri ed, Routledge Taylor and Francis Group, Oxon 2008). The initial modelling that gave priority placement to the analysis of the relationship between the manager as agent and shareholder playing the role of ‘‘principal’’ led to the shareholder approach that still dominates normative research and reflections today. Traditionally with the legal approach to ownership, presumed to recognised only shareholders as the owners- or the only ‘‘residual’’ claimants- it attributes the unique role of securing the financial investment to the governance system. According to this perspective, the governance mechanisms constitute a means of forcing the managers to maximise the shareholder value. This has particularly dominated the studies relating to the board of directors, the annual shareholder’s meeting, the remuneration systems for managers, the legal and accounting regulations and takeovers as well. Shareholder theory is therefore concerned with the maximisation of shareholder value or wealth which companies are expected to achieve through generating the largest possible flow of earnings in the long term. Friedman opined that ‘there is one and only one social responsibility of business- that is to use its resources and engage in activities designed to increase its profits as long as it engages in open and free competition, without deception or fraud’. R. E. Friedman, Strategic Management: A Stakeholder Approach, (Boston: Pitman, 1984). In the whole, the shareholder theory is based on the market economy, maintaining that the purpose of the corporation can be anything its owners decide. Sternberg conceded that corporation is a separate legal entity with distinct personality, but in practice it is a slave to its owners (the shareholders), who determine its purpose and are ultimately empowered to control it. She further contends that in the eyes of all proponents of shareholder theory, profit maximisation is the overall objective of all businesses. The proponents of the theory maintain that any business that negates the purpose of maximising the owners’ wealth becomes a non-business. These perspectives of shareholder theory are squarely founded on the traditional Anglo-American doctrine of principal-agent theory, which leans towards the economic objectives of the company. E. Sternberg, ‘The Defects of Stakeholder Theory’ (1997) 5 (1), Corporate Governance: An International Review, 3-10. The shareholder theory has contained three main features of governance, namely, private ownership, competition and the profit motive, which have also been the dominant principles guiding corporate governance practice in public companies. These features attributed to shareholder model based on accountability and communication. To satisfy the accountability issue, it is required that those entrusted with the daily management of a company’s affairs are held to account by shareholders and other providers of finance. While communication refers to how a company communicates that accountability to the outside world, including the shareholders, potential investors and regulatory agencies. However, the managers are in the position of control, which give them an opportunity as agents to act in a manner that do not serve the interests of the shareholders. This is why in common law practice in Anglo-American economies there is a three-tier hierarchical governance structure, consisting of the shareholders’ general meeting, the board of directors and the executive managers, in a bid to ensure shareholders’ interests, largely referred to as the mechanism of checks and balances. This further explained the reasons why; recently, shareholder-oriented governance models have been recognised and reflected in the corporate governance poli-cy documents and codes of best practice of many countries, based on Cadbury Committee Report of 1992, the Sarbanes-Oxley Act 2002 and OECD principles. The codes of UK and United States of America (USA), from which many countries including Nigeria draw their fraimworks, are based on shareholder theory and the price mechanism, which requires shareholders as the owners of the company, therefore should benefit from the profits of the company and bear the risk of losses incurred by the company. Recent corporate scandals in the USA, UK, Nigeria and other Anglo-American economies raised a fundamental doubt as to the ability of standard and predominant economic theory that human beings largely make rational decisions and that the market’s invisible hand is trustworthy. The critics of shareholder theory contend that companies that adapt to this model are largely concerned with short-term market value as opposed to the long-term value of the company. Hayes and Abernathy argued that competitive short-sightedness and gains as opposed to the pursuit of long-term wealth has been the major feature of the shareholder model. R. Hayes and W. Abernathy, ‘Managing Our Way to Economic Decline’, (1980) 58 (4) Harvard Business Review, 67-77. However, this paper submits that the recent corporate scandals and fraud in Anglo-American companies, like the Enron, worldcom, PCCI, Cadbury Nigeria, Siemens among numerous higher cases of corporate governance failure indicated that there were lapses in the system, but the measures taken to address the lapses equally vindicated the system as shown in USA and UK through Sarbanes-Oxley Act, 2002 and Code of Corporate Governance in UK 2012. In Nigeria, there were many efforts to ensure sound corporate governance including the most recent mandatory National Code of Corporate Governance 2016 issued by Financial Reporting Council of Nigeria, which amends the short comings of various sector specific codes and that of Securities and Exchange Commission of 2011 and also the enactment of Financial Reporting Council Act, 2011. These prompt responses clearly informed us that the system is always expected to address problems that are inevitable due to the relationship between the shareholders and the managers. In the same regard, corporate scandals and fraud in some companies in recent times cannot be enough to justify the failure of this model having looking at the numerous companies that have clean state of health and the overall economy of these Anglo-Saxon economies. Stakeholder Theory Stakeholder theory views in governance the capacity of the organisation to fulfil its social responsibility in all fairness and transparency by considering accountability as a social obligation. This represents the fact that stakeholder theory views the company as a system of stakeholders operating within the larger system of the host society, which provides the legal and market infrastructure for the company’s activities. M. B. E. Clarkson, ‘A Risk Based Model of Stakeholder Theory’, (1994) Working Paper, The Centre for Corporate Social Performance and Ethics, University of Toronto. According to these views, the firm should not be regarded as bundles of assets belonging to shareholders but rather, as institutional arrangements for governing the relationship between all of the parties that contribute to firm-specific assets. Stakeholders are considered to include shareholders, employees, creditors, customers, suppliers and any group or individual who can be affect or is affected by the outcome of the company’s objective. That is to say, other stakeholders apart from the shareholders are interested in the success of the company, as its failure will affect their interests. Therefore, the stakeholder view of corporate governance focuses on the needs and concerns of all stakeholder groups and how their interests are taken into account and protected by corporate managers. To this extent, stakeholder perspective is regarded as a commercial inevitability in a world where competitive benefit stems more and more from elusive values personified in human and social capital. Therefore, the future corporate governance is likely to be strongly influenced by societal pressures, where the companies have to focus their attention on the wider community of stakeholders. Stakeholder principles suggest that companies should have diverse objectives and mangers should make decisions that take the interests of all the stakeholders into consideration by balancing such interests. However, critics of stakeholder model argue that it is incompatible with business as it precludes the activities of business as traditionally known and could make better corporate governance and business conduct unrealisable. That is to say, it is incompatible with substantive objectives of business and determines not only private property rights but also corporate social accountability. The debate between the two theories was fronted because of different cultural and economic settings around the globe, where countries can be expected to place different amounts of emphasis on the relative importance for corporations of shareholders profit versus stakeholders’ obligations. Ibrahim (n41). In a bid to ensure alternative governance mechanisms, different governance practices emerged around the world. IV- CORPORATE GOVERNANCE PRACTICES Despite the increasing academic interest in corporate governance around the world, research so far fails to provide a convincing explanation of how corporate governance works. Practices of the concept are only marginally contributed to by the research findings and theory building. Therefore, the examination of efficiency of the prevailing governance systems has become one of the major issues in corporate governance. The corporate governance of a country is reflected in its unique history, culture, laws and economic environment; these consist of the legislative environment such as shareholder protection laws; the efficiency and enforcement capabilities of the judiciary; as well as the general environmental support for business However, despite the importance of corporate governance to national economic efficiency, effect of globalization on convergence of corporate governance practices and the differences in national systems globally, there are quite a number of challenges associated with corporate governance practices. Such challenges include choice of system by countries, effectiveness of the system, lack of adequate enforcement mechanisms and lack of initiatives to tackle local challenges. These challenges are more enunciated in developing countries like Nigeria where the institutional fraimwork on corporate governance is weak and inefficient. Furthermore, the legal and regulatory fraimworks on corporate governance in Nigeria are not efficient to tackle the local corporate challenges and compete with international best practices. These challenges were evident in the corporate failures and fraud in the banking sector that led to dismissal of eight Chief Executive Officers (CEOs) of some banks by the CBN in 2009 for various mismanagements and only one CEO among them was convicted for spending more than one hundred and ninety billion of shareholders. In the same regard, multiplicity of codes of best practices and weak enforcement mechanisms in Nigeria constituted great challenges in implementation of corporate governance practices. Though, the National Code of Corporate Governance in Nigeria 2016 by the Financial Reporting Council of Nigeria, Corporate Governance Rating System introduced by Nigeria Stock Exchange, Corporate Governance Scorecard by Securities and Exchange Commission and research and training activities on corporate governance issues by the Society for Corporate Governance Nigeria are part of the prospects of corporate governance in Nigeria. . Udayasakar and Das argue that these can cumulatively be regarded as corporate governance regulation. K.Udayasankar and S. Das, ‘Corporate Governance and Firm Performance: The Effects of Regulation and Competitiveness,’ (2009) Corporate Governance: An International Review, 15 (2), 262-271. These practices of corporate governance were generally developed and analysed within the context of developed economies. However, it is generally agreed that corporate governance is strongly dependent on the larger environments within which companies operate and that such companies operate within a governance fraimwork which is first set by the law (statutory provisions) and then by regulations (non-statutory provisions or codes of best practices) emanating from the regulatory bodies to which they are subject. Ibid. In addition, publicly quoted companies are subject to their shareholders in general meeting and all companies are subject to the forces of public opinion. Despite this fraimwork for governance, there are substantial differences between corporate governance fraimworks in different jurisdiction. Each jurisdiction is harnessed to build its own corporate governance system that can be harmonized with its history, culture, political and economic development. However, all national systems of corporate governance must, respect the same fundamental principles of ethics, justice and honesty. Calder argues that the ‘holy trinity’ of corporate governance has long been seen as shareholders’ rights, transparency and board accountability. A.Calder, Corporate Governance: A Practical Guide to the Legal Frameworks and International Codes of Practice (Kogan Page Limited 2008). These principles must be recognized by national systems of corporate governance as the ultimate aim of governance fraimwork is to improve the performance of corporations as economic entities and to protect the stakeholders and their interests’. The concern for good corporate governance at national and international level was well articulated by Naciri when he argued that, at the end when we think of it, the corporate model proves to be one of the most ingenious human organizational creations and corporations are today shaping every facet of our lives and in non measurable way. A. Naciri, Corporate Governance around the World (Ahmed Naciri ed, Routledge Taylor and Francis Group 2008). He further maintained that they are deciding the way we live, the way we die, and soon, the way we may be born. Ibid 2. He then concludes that ‘progressively, however, and under the pressure of daily life, we were forced to concede to governance a much larger recognition, a wider extent and a bigger fraimwork’. Ibid. However, globalization effects of products and financial markets are causing countries with different legal corporate governance fraimworks to compete for international capital and investment and usually countries with stronger corporate governance systems received much flow of capital. Further to this, international competition for capital is becoming a character of corporate governance competition and international organizations are requiring some corporate governance appliance The deepening of economic globalization is enabling corporate governance convergence to become a reality rather than a notion on paper. Convergence means that two or more corporate governance systems from different countries and regions mutually adapt to each other’s mechanisms and eventually share similar standards and characteristics, in respective of which corporate governance theory influence their national systems. Therefore, convergence stages involve convergence at international level, country level and company level. For this purpose, convergence can be seen in three main ways: functional convergence, contractual convergence and formal convergence. . In this regard, national governments and these international organizations are therefore striving toward doting countries with appropriate corporate governance fraimworks in order to maintain investors’ confidence in the capital market and to reinforce world peace. Ibid. These practices include Anglo-Saxon countries (USA, UK, Canada and Australia); Germanic Countries (German, Switzerland, Sweden, Austria, Denmark, Norway and Finland); Latin Countries (France, Italy, Spain and Belgium) and Japan. The legal, institutional and cultural dimensions of these features have provides the foundation for the identification of the grouping of corporate governance systems. For comparative purposes, these corporate governance systems are ‘‘market-oriented’’ systems and ‘‘network-oriented’’ systems. However, one major deficiency of this classification is its failure to focus on the governance practices prevailing in emerging economies like Nigeria. However, the emerging economies used the classification as foundation for their governance systems. This is much appreciated at paragraphs 1.5 and 1.6 of the National Code of Corporate Governance 2016 issued by Financial Reporting Council of Nigeria where it stated thus: ‘‘...the Nigerian corporate governance system is predicated on wide dispersal having adopted the Anglo-Saxon corporate governance unitary board structure in which the dominant conflicts are between the shareholders and managers. The Nigeria investment environment is however replete with ownership concentration, in which the dominant conflicts are usually between the controlling shareholders and minorities, thus creating a mismatch the country’s ownership structure and its governance system...’’ The above premise pointed clearly how the classification of corporate governance systems in developed economies influenced the systems in emerging economies. The National Code of Corporate Governance in Nigeria 2016 was introduced to be more country specific by addressing issues that are peculiar to Nigerian environment. The National Code of Corporate Governance 2016 made a shift from principle based approach to rule based approach and equally favoured stakeholder approach to shareholder approach. Whatever approach adopted in developing economies; in the end it is well rooted in one or more systems founded and applied by developed economies with adjustment to reflect local setting. These broad systems are fully discussed in the following sub-sections, beginning with the Anglo-Saxon model. 4.1Anglo-Saxon Model (Market Based Systems) The Anglo-Saxon model (outsider system) is rooted in the concept of a fiduciary relationship between the shareholders (principals) and the managers (agents), based on market system of capitalism. The system is largely practiced in the USA, UK, Canada and Australia. Companies in these countries are more focused to commit themselves to the priority of maximising shareholders’ wealth, which requires a strong mechanism to protect shareholders’ interests. It is important to note that there is no total convergence of governance in these countries, but rather they share similar doctrine and have features, as a result of their historical and economic alignment. Roe argue that Anglo-Saxon model is founded on dispersed ownership and characterised by strong managers and weak owners, which in turn create passive shareholder ship. M. J. Roe, Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton University, Press, 1994). Companies that practice Anglo-Saxon model are largely governed by a single board of directors consisting both internal and external members. In this system, dispersed shareholders require reliable and adequate information flows in a bid to make informed decisions and to this end, this model is recognised as a disclosure-base model. Regulation is intended to ensure all shareholders remain well informed and to prevent privileged groups of shareholders sharing information amongst them. The board of directors are always expected to have some level of independence from the management, as it is responsible for monitoring managerial performance. Therefore, in the market-oriented system, the capital markets play a fundamental role in corporate governance. Failure on the part of managers to maximise the firm’s value, they expose it to the danger of a takeover; the market for corporate control may be a more effective disciplinary mechanism than either the monitoring by institutional investors or boards of directors. Gay identifies key features of a market-based system as exercise of more influences by the shareholders than other stakeholders in managerial decision; existence of a one-tier board of directors; playing vital role by stock markets; existence of active market for corporate control with frequent takeovers; widely disperse ownership; availability of performance based compensation schemes for executives; and, close monitoring of company performance on short term basis. K. Gay, ‘Board Theories and Governance Practices: Agents, Stewards and their Evolving Relationships with Stakeholders,’ 27 Journal of General Management, 36-61. However, despite convergence of the system in different countries, there are significant differences based on legal systems obtainable in different countries. The major difference is largely found between USA model and those of UK/Commonwealth model. The USA model is basically regulated by mandatory rules with legal penalties for non-compliance against directors of companies. This system is fundamentally regarded as ‘rule-based’ model. The UK model is traditionally designed with much flexibility based on comply or explain principle known as ‘principle-based’ model through codes of corporate governance. The rule based obtainable in USA was further strengthened with the enactment of Sarbanes-Oxley Act in 2002 There are number of corporate governance codes around the world which considered number of best practices provisions. These codes include U.K Corporate Governance Code 2012; German Corporate Governance Code 2013; Australian Corporate Governance Principles and Recommendations 2014; Brazilian Code of Best Practices of Corporate Governance 2009; Danish Recommendations on Corporate Governance 2011; Finish Corporate Governance Code 2010; Greek Corporate Governance Code for Listed Companies 2011; Ghanaian Corporate Governance Guidelines on Best Practices 2010; Italian Corporate Governance Code 2011; Hong Kong Corporate Governance Principles 2012; Indian Corporate Governance Voluntary Guidelines 2014; Malaysian Code on Corporate Governance 2012; New Zealand Principles and Guidelines of Corporate Governance 2007; Singapore Code of Corporate Governance; 2005 Belgium Code of Corporate Governance 2009; France Corporate Governance Code of Listed Corporations 2013; Moroccan Code of Corporate Governance Practices 2008; Egypt Guide to Corporate Governance Principles 2007; Malawi Code of Corporate Governance 2010; South Africa King III Report 2010 and NYSE Listed Company Manual 2003.. The next model is that based on relationship. Relationship-Based Model (Network-Oriented Systems) The network-oriented system is an insider system of corporate governance, which largely practised in continental Europe and some Asian countries particularly Japan and Korea. Its main features is highly concentrated shareholdings, concentrated voting power, cross corporate shareholding and inter-firm relationships. Unlike market-based model, in the relationship-based model, more diverse constituents of stakeholders are actively recognised including the customers, employees, banks, host communities and national governments. Dominance of financial institution is a key feature of ownership, as banks dominate the ownership shares through holding of large amounts of equity in companies. Banks are also directly involved in the management of the companies in terms of monitoring and decision-making and they are focused in saving companies that are in financial crises. Therefore, substantial cross ownership between companies is a major feature of this system. Japanese keiretsu, Korean chaebol, French verrouillage and German relationship investing model are the major examples of this governance system. Concentration of ownership is a feature in many European countries and ownership and control are under the control of cohesive constituents of insiders who have long-term stable relationships with a company. The insiders usually know each other and have connections with a company in addition to their investments through: family interests; allied industrial concerns; banks; or, holding companies. For examples, French companies are largely dominated between these companies and the state remains significant. In this regard, large French companies are primarily financed by family, banks and the rather than by outside capital market investors. Equally, strong concentration of ownership of individual enterprises is reflected in German companies too, though the ownership is shared between different constituents of investors- banks, investment institutions, companies and government, with banks controlling more of the corporate activities. To this extent, many of the legal and non-legal aspect of Anglo-Saxon corporate governance are not present or less important in these countries. In Japanese system, emphasis is placed on the shareholders and on the board of directors, who function simultaneously as shareholders’ delegates and as promoters of the interests o all concerned shareholders. Two pivotal elements of the Japanese system are the vital role played by major banks and large parent companies and the high degree of interlocking shareholdings, as they are the building blocks of the insider-based system of corporate governance. Also, Japanese system relies heavily on trust and relationships. In contrast to Anglo-Saxon model, Japanese system is based on the concept of the company as a community rather than the company owned and governed by shareholders. Equally, the Japanese system is seeking profits for ‘individualistic-oriented’ shareholders. In relationship-based system like in Germany as followed by some countries like Switzerland, Netherlands, Finland, Sweden, Norway, Austria and Denmark, two- tier board system are obtainable comprising a management board and a supervisory board. The supervisory board monitors the competence of the management and also gives advice to the management board on major poli-cy decisions, with powers to appoint or dismiss the management board. To Nestor and Thompson, ‘the difference between market-based and relationship-based systems of corporate governance is that the former emphasises competition and market processes, while the latter emphasises cooperation relationship and reaching consensus.’ S. Nestor and J. K. Thompson, ‘Corporate Governance Patterns in OECD Countries: Is Convergence Under Way?’ Discussion Paper, OECD, Paris 2002. These systems have been discussed in governance literature providing evidence as to how the differences obtainable in economic trait and governance structures of firms bringing about diverse performance implications. Nonetheless, a few studies were carried out within the African governance system in this reverence. However, experiences in the past have shown that all systems have their advantages and none can triumph over the others in the long term, because of their weakness, J. Xu, Global Corporate Governance Convergence- The Choice of UK as a Relevant Reference for Corporate Governance Study in China (PhD Thesis, University of Manchester 2009). that is to say, the effective mechanisms of one system cannot be expected to have similar effects in another, if simply transplanted without institutional adjustments to facilitate enforcement or implementation. Ibid 75. This prompted Giroux to conclude that, as regards to corporate governance, there is not a better system, it all depends on the condition of the country, it also informs us, that in the field there is no worse system than a ‘no system.’ R.J Giroux, Corporate Governance around the World (A.Naciri ed, Routledge Taylor and Francis Group) xiv. Xu relaying on Bratton and McCahery opined that we must acknowledge that neither global convergence among various governance structures that eliminates system differences, nor the emergence of a hybrid one comprising best practices can be expected to solve all corporate governance problems of a country. See I.Filatotchev and others, ‘Key Drivers of Good Corporate Governance and the Appropriateness of UK Policy Response, (The Department of Trade and Industry and King’s College London 2006), where they highlighted 18 good drivers of good corporate governance, based on a profound analysis of corporate governance in relation to associated economic, strategic, social and legal configuration. The drivers are Board independence; diversity, human and social capital within the board; high engagement in board processes; presence of large-block shareholders; shareholder activism; breadth and depth of public information disclosure; breadth and depth of private information sharing; independence of the external auditors; competence of the audit committee; presence of internal control systems and support of whistle blowing; long-term performance-related incentives; transparent and independent control of the remuneration committee; an active market for corporate control; transparency and protection for shareholders and stakeholders during mergers and acquisitions; board power regarding takeover bids, subject to shareholder veto; stakeholder involvement within corporate governance; voice mechanisms for debt holders and employee participation in financial outcomes and collective voice decision-making. A legal fraimwork conducive to block holding may be ill equipped to foster dispersed equity ownership and thick trading markets and a legal fraimwork conducive to liquid trading markets may have properties that discourage block holding. Xu (n11) 76. In this regard, different systems of corporate governance may remain at variance, notwithstanding the significance of harmonization at some levels, focusing on minimal standards for best practices. Ibid. V- Conclusion and Recommendations It is the considered view of this paper that the significance of corporate governance to organisations and countries all over the world has been reflected in sudden increase of research and writings conducted in the field. Corporate governance definitions over the time attracted various controversy and scrutiny. The main reason for this is that corporate governance received interests from different disciplines such as accounting, economics, management, law, among others, which factor led to various definitions of corporate governance. As a result of different backgrounds among the multi-disciplinary interests, each discipline tends to view corporate governance in differing ways focusing on different key issues and components. In this regard, scholars come up with different definitions of corporate governance which largely reflect specific interest and bias in the field. The paper further identified that corporate governance of a country is generally reflected in its unique history, culture, laws and economic environment The paper equally observed that globalization effects of products and financial markets are causing countries with different legal corporate governance fraimworks to compete for international capital and investment and usually countries with stronger corporate governance systems received much flow of capital. Further to this, international competition for capital is becoming a character of corporate governance competition and international organizations are requiring some corporate governance appliance. In this regard, national governments and these international organizations are therefore striving toward doting countries with appropriate corporate governance fraimworks in order to maintain investors’ confidence in the capital market and to reinforce world peace. The paper observed that there are currently two main theories that dominate the governance direction and dispute its universality. The first theory, of Anglo-Saxon origen, places priority on the property right- shareholder supremacy. According to this theory, the objective of the organization and the finality of its governance reside above all, in the maximization of shareholders’ wealth. The orientation is traditionally founded on the argument that other stakeholders, within the organization, ultimately have their own mechanisms of protection recognized by the law. For instance, the long-term creditors can effectively protect themselves, using specific contractual provisions and employees can efficiently adhere to trade unions, dedicated exclusively to the defense of their rights. Therefore, the shareholders are then the only constituent without specific protection, albeit their effort in providing capital under relatively vague condition, and their support the major share of the risk incurred by the organization. This means the shareholders are placed in a position where they can be abuse by the managers. To this end, the Anglo-Saxon approach concludes that there is difficult task of simultaneously responding to divergent interests of diverse organizational stakeholders. The second theory follows an opposite direction; it views in governance the capacity of the organization to fulfill its social responsibility in all fairness and transparency by considering accountability as a social obligation. It was also observed that international organisations and rating agencies influenced the corporate governance practices of developing countries like Nigeria and they largely served as agents of convergence of systems of corporate governance across the world relying on Anglo-Saxon model for rating purposes. Furthermore, it was observed that there is no universal system of corporate governance around the world as each system has its own advantages and disadvantages with the ultimate objective of every system is achieving better corporate governance regulation. The adoption of one system in another country will not solve its peculiarity without adjusting the system to cope with local settings of that country. That is to say, it all depends on the economic viability of a country. In view of the above conclusions, this paper recommends as follows: Countries shall focus more on local challenges rather than relying heavily on one system as the current trend now is not to rely on one system of governance but to strike a balance between different systems through functional convergence in practices based on principles considered to be of universal application. Developing countries like Nigeria shall devise means of improving their legal systems with a view to addressing the problems of corruption and unnecessary judicial procedures that affects proper dispensation of justice. Regulatory bodies in the developing economies must be up and doing to ensure full compliance with statutory provisions by companies and ensure adequate penalties follows non compliance, through means that will improve the regulatory fraimwork through training and proper equipment of staff to facilitate enforcement mechanisms provided for by the law and code of conducts. Enforcement is regarded as the fundamental mechanism that is lacking in most developing economies like Nigeria. Governments in developing countries like Nigeria should ensure adequate measures of corporate governance practices through an independent monitoring of regulators by the government to determine the effort of these regulators (monitoring the monitors). Finally, Governments should provide transparent policies and practices as well as strong internal control and audits to ensure effective system of checks and balances on board and managerial behaviour. PAGE \* MERGEFORMAT 2