Title Page
Approval Page
Table of Contents

1.1       Background of the Study
1.2       Statement of Problem
1.3       Objectives of the Study
1.4       Research Questions
1.5       Research Hypotheses
1.6       Significance of the Study
1.7       Scope of the Study
1.8       Limitations of the Study
1.9       Definition of Terms

2.1       Introduction
2.2       Conceptual Framework
2.2.1    An Overview of the Concepts of Corporate Governance
2.2.2    Board Composition and the Separation of Ownership From Control
2.2.3    Board Composition Functions
2.2.4    Board’s Monitoring and Firms’ Critical Decisi ons
2.2.5    Board Process and Effectiveness Get the Right People Putting a Meaning Structure in Place Setting the Stage for Effective Board Meeting Steer Board Meetings to Improve Board Process
2.3       Theoretical Framework
2.3.1    Theories of Corporate Governance Agency Theory Resource Dependency Theory Stewardship Theory
2.3.2    Types of Board of Directors Executive Directors Non-Executive Directors or Independent Directors
2.3.3    Effectiveness of Non-CEO Inside Directors and Implication for Power Dynamics with Top Management
2.3.4    Effectiveness of Outside Directors and Implication for Power Dynamics Within Top Management
2.3.5    Board Composition and CEO Compensation Board Composition and CEO Turnover Board Composition and CEO Tenure Board Composition and Non-CEO Executive Ownership
2.3.6    Power and CEO Leadership Evolution Power and CEO Leadership Development
2.3.7    CEO Board Relationship Dynamics CEO Development Period – The Honey Moon Per iod Advocacy
2.4       Empirical Review
2.4.1    CEO Tenure and the Promotion of Inside Directors
2.4.2    Efficiency of Separating Ownership From Control
2.4.3    Using Board to Reduce Residual Risk
2.4.4    Special Governance Role of Inside Directors
2.4.5    Board Composition and Decision Control Emphasis Strategic Versus Financial Control Strategies Board Composition and the Emphasis of Control Strategies Control Emphasis and the Allocation of Residual Risk
2.4.6    Board Composition and Unrelated Diversification The Control Emphasis of the Board and Corporate Diversification Strategies
2.4.7    Research and Development Expenditure
2.4.8    Board Composition and CEO’s Total Compensation

3.1       Introduction
3.2       Research Design
3.3       Nature and Sources of  Data
3.4       Population of the Study
3.5       Sample Size Determination
3.6       Sample Procedure
3.7       Validity of the Instrument
3.8       Reliability of the Instrument
3.9       Techniques of Data Analysis
3.10     Robustness Test
3.11     Description of Research Variables
3.11.1  Independent Variable (Outside Directors)
3.11.2  Dependent Variables
3.12     Technique for Analysis

4.1       Introduction
4.2       Analysis of Questionnaire Distribution
4.2.1    Questionnaire Response Rate
4.2.2    Educational Background of Respondents
4.2.3    Table Education Background of Respondents
4.2.4    Personal Data of Respondents
4.2.5    Effect of Board Composition on CEO’s Compensation
4.2.6    Effect of Board Composition on Incentive pay
4.2.7    Effect of Board Composition on CEO’s Investment in unrelated diversification
4.2.8    Effect of Board Composition of Research and Development Expenditure
4.2.9    Effect of Board Composition on Debt Intensity
4.2.10  Effect of Board Composition on CEO’s Turnover
4.3       Test of Hypotheses
4.3.1    Test of Hypotheses 1
4.3.2    Test of Hypotheses 2
4.3.3    Test of Hypotheses 3
4.3.4    Test of Hypotheses 4
4.3.5    Test of Hypotheses 5
4.3.6    Test of Hypotheses 6
4.4       Test of Robustness
4.4.1    Summary of Pooled Ordinary least Square Results
4.5.      Discussion of Research Findings
4.6       Discussion of Robustness Test Results

5.1       Introduction
5.2       Summary of Findings
5.3       Conclusion
5.4       Recommendations
5.5       Contribution to Knowledge
5.6       Suggestion for Further Studies

This study examines the effect of board composition on critical decisions of Nigerian quoted firms. The six critical decisions studied were Chief Executive Officer’s (CEO) total compensation, CEO’s incentive pay out of total compensation, the level of firm unrelated diversification, intensity of firm research and development expenditures, firm’s debt intensity and CEO turnover. The six hypotheses formulated for the study were estimated using the Z-test, analysis of variance (ANOVA) and generalized least square (GLS) multiple regression. The findings of the study showed that board composition had negative effect on CEO’S total compensation; while board composition had positive effect on critical decisions such as; CEO incentive pay out of total compensation, firm unrelated diversification, firm’s research and development expenditure, firm debt intensity and CEO turnover. The findings of the study provide partial evidence on the effective of the agency theory. One of the greatest contributions of the studies is the discovery of entirely agency conflict which is between the non-executive board members and shareholders. The theoretical framework and findings of this study are expected to stimulate scholars for further research on mechanism for resolving this entirely new version of agency conflict in the Nigerian corporate environment.

1.1              Background of the Study
Corporate governance systems have evolved over centuries, often in response to corporate failures or systemic crises. For example, much of the securities law in United States were put in place in response to the stock market crash of 1929 (Iskander and Chamlou, 2000: 16). The Enron collapse also led to the enactment of ‘The Sarbanes-Oxley Act 2002’.It is pertinent to note that the principles of company laws in Nigeria were derived from English law, which can be traced to the influence of colonization. The early companies that operated in Nigeria were British based companies. By virtue of Colonial statutes enacted between 1876 and 1922, the laws applicable to companies in Nigeria at this time were the common law, the doctrines of equity, and the statutes of general application in England on the first day of January, 1900 subject to any later relevant statute (Nigerian Law Reform Commission, 1991: 92). The implication of this approach is that the common law concepts such as the concept of the separate and independent legal personality of companies as enunciated in Salomon v. Salomon was received into the Nigeria Company law and has since remained part of the law (Amao and Amaeshi, 2008: 1-16).

With the continuous growth of trade, the colonialist felt it was necessary to promulgate laws to facilitate business activities locally. Hence, the first company law in Nigeria was the Companies Ordinance of 1912, which was a local enactment of the Companies (Consolidation) Act 1908 of England. The Ordinance was amended severally and consolidated into the Companies Ordinance of 1922 (Nigerian Law Reform Commission, 1991: 109). The 1922 Ordinance was subsequently amended in 1929, 1941 and 1954 respectively. The attainment of independence in 1960, coupled with the vitriolic criticisms that trailed the existing company law in Nigeria at that time, led to the enactment of Company Act of 1968.

One of the important provisions of the 1968 Act was the legislation that all companies operating in Nigeria must be incorporated in the country. However, the legal framework of the Act has its root in the British legislation. The Company Act of 1968 was, of course, a replica of the United Kingdom Companies Act of 1948. The 1968 Company Act was also criticized for not taking into cognizance the peculiar nature of the Nigerian corporate environment, but protected only British business interest in Nigeria. Amao and Amaeshi (2008: 1-16) argue that British nationals controlled the major enterprises in Nigeria, and to protect their economic interests, they had to....

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