ABSTRACT
The era of information technology in which we live has
turned the world into a global village. This encourages uniformity in the ways
and practices of corporate governance. The concept of corporate governance has
in recent times assumed global dimensions. This is made inevitable because of
certain factors. The first is the present era of the giant public corporation
with subsidiaries and off-shoots in various countries whose sheer size in terms
of assets are larger than most nation-states. The second is that the corporate
governance structure and practices of these companies must, of necessity be
uniform and meet a minimum standard wherever the companies operate. These
therefore dictate the need for certain measure of uniformity and consistency in
corporate governance strategies and rules all over the globe. This work shall
provide a framework for analyzing and understanding these trends. It shall
offer a conceptualization of globalization that captures its historical
process; its cross-disciplinary character, the distinction between types of
globalization and the contrasting nature of its impact. The efficiency and
accountability of the corporation is now a matter of both private and public
interest and governance has thereby come to the forefront of the international
agenda. This work therefore will attempt to exray the essence of “corporate
governance”, its nature, framework and the impact of the concept of
globalization in corporate governance. Necessary deductions and findings are
hoped to be achieved which will assist in the improvement of the entire
corporate governance framework in Nigeria in line with global trends.
This work is arranged in seven parts. Chapter one presents
details of the nature and scope of globalization, chapter two presents details
of the meaning of corporate governance and its objectives, chapter three deals
with the laws and institutions regulating corporate governance in Nigeria,
whereas chapter four dwells on the impact of globalization on
contemporary corporate governance practices, in chapter five the impact/effect
of contemporary corporate governance practices to the Nigerian economy is
discussed. Chapter six discusses the dilemma of globalization and the fear of
local market. While chapter seven deals with the recommendation and conclusion.
Methodology
The method adopted in this research consists of the
examination of relevant textbooks, statutes, newspaper, articles, and the
internet report, case law of courts both within and outside Nigeria,
comparative analysis between the laws and institutions regulating corporate
governance in Nigeria, United States, Brazil and other countries were equally focused
upon in the cause of this research.
CHAPTER ONE
NATURE AND SCOPE OF GLOBALIZATION1.1 Introduction
Advances in
technology have resulted in a greater degree of interaction between countries,
organizations and individuals all over the world. Interwoven interests in
business have grown in leaps and bounds over the last few decades. Indeed, the
internet and other communications technology have transformed the world into a
global village in which it has become much easier to identify and pursue
economic and business opportunities. Companies have thus been enabled to
disperse their operations around the globe and to manage more effectively,
their production process and inventories.
Indeed, we
are experiencing unprecedented global integration. For the first time in history,
all regions of the world are inter locking their economies and becoming
increasingly inter-dependent. Therefore, if the issue and the problems are
global, the solutions must be global as well.
The
governance of the corporation is now as important in the world economy
as the government of countries;
1 therefore corporate governance has become an issue of worldwide
importance. The corporation has a vital role to play in promoting economic
development and social progress. It is the engine of growth internationally,
and increasingly responsible for providing employment, public and private
services,
goods
and infrastructures. 2.
The
global financial crisis sent new urgency to corporate
Besides
technology advances, another driving force behind the recent rapid
gloablisation process had been liberal governmental policies that have opened
up economies both domestically and internationally. Many governments have
adopted free – market economic systems, which have increased their own
productive potential and created a whole lot of new opportunities, Corporations
have built foreign factories and established production and marketing
arrangements with foreign partners. Globalization has therefore given rise to
an international industrial structure in which thousands of the world’s largest
corporations maintain operations in multiple
countries
3.
There is
also this growing realization that capital markets and corporations are created
by society and must therefore serve it, not merely profit from it and that
consumers’ and citizens campaigns’ can make all the difference. In this age of
globalization, corporations and business enterprises are no longer confined to
the traditional boundaries of the nation – states.
Whether the company is state or privately owned,
whether it requires Local or International Capital,
governance is critical. From a Corporation’s Perspective, the emerging
consensus is that corporate governance is about maximising value subject to
meeting the corporation’s financial and other legal and contractual
Obligations. This inclusive definition stresses the need for boards of
directors to balance the interest of shareholders with those of other
stakeholders – employees, customers, suppliers, investors, communities, in
order to achieve long-term sustained value. From a public policy perspective,
corporate governance is about nurturing enterprise while ensuring
accountability in the exercise of power and patronage by firms. The role of
public policy is to provide firms with the incentives and discipline to
minimize the divergence between private and social returns and to protect the
interest of stakeholders.4
In
pre-globalization era, what corporations did was mainly their personal business
within the units of national legal and regulatory framework, as well as
internal policies and controls established by the companies themselves, if any.
But with the increased interwoven interests between corporations and nations
and particularly, since the corporate scandals of the 90s and early 2000s, all
of that has changed. Governments are beginning to demand a higher degree of
accountability, transparency; and responsibility from the management of
corporation; legal and regulatory framework are consequently being tightened up
in order to avoid the collapse of companies which has serious negative
consequences for national economies;
5 Multilateral
and international financial and development Organizations have equally been
engaged in drawing up codes of good corporate governance and best practices and
demanding that both member and non-member countries adopt such codes and best
practices, subject to modification and further elaboration to suit local
circumstances 6. It is therefore becoming increasingly difficult to
find a hiding place anywhere.
In the world
of today, the degree to which corporations adhere to basic principles of good
governance is an increasingly important factor for making investment decisions.
This is particularly relevant in view of the relationship between corporate
governance and the international character of investment. For companies to reap
the full benefits of the global capital market and attract long-term capital,
corporate governance arrangements must be credible, well understood across
borders and adhere to minimum standards of accepted principles.7
It is worthy
of note that corporate governance is only a part of the larger economic context
in which firms operate. The corporate governance framework as earlier stated
depends on the legal, regulatory and institutional environment. Factors like
Globalization
and corporate governance are very wide in scope, Globalization of corporate
governance mechanisms is one of the most significant developments in
international economics in the last two decades. The effect of globalization is
profound and its integrative momentum powerful. It challenges the adaptive
capacity of the nation – state and demands new processes of democratization.
The shift to a global economy suggests the needs for transnational forms of
governance. Developing states view globalization with suspicion suggesting an
attempt to overwhelm them in this unequal partnership.
As
elucidated here upon the two definitions from public and private perspective
provide a framework for corporate governance which reflects an interplay
between internal incentives that define the relationship among the key players
in the corporation and external force, notably policies, legal regulatories and
markets, that in turn govern the behaviour and performance of the firm.
The
relations between globalization, and corporate governance practices are, right
now, matters of great importance to citizens, to government and to
non-governmental organizations all over the world. They are, therefore, of
great concern to the legal profession which we belong to and whose
professionals we adore and cherish.
The
hopes and expectations shared by men of this noble profession during the middle
decades
of the 20th century, were that the world would become increasingly
more
Criminals,
Semi-Criminals and criminal organization, have taken over control of key levels
of power in many governments and control of powerful trans-national
corporations and banks in many countries. They are systematically stealing
public funds, plundering and taking over the ownership of vast natural
resources, ripping off citizens, defrauding shareholders and milking huge transnational
corporations.
In some
parts of the world, criminals, parading themselves in one corporate, political,
ethic or religious disguise, or another have established dubious personalities
and other forms of mischievous associations operating in complete violation of
the corporate body principles and objectives. They are unleashing violence
within national and across national corporate bodies claiming to be pursuing
goals which are as hazy as they are dubious.
The topical
theme and its wide ramifications and implications concerns the concept of
globalization. Over such, we cannot avoid facing up to the question of what
exactly is globalization? In this work an attempt is made at this which
constitutes one major component of the theme of this research.
There are so
many definitions on globalization. But, the essence of the conception of it,
which is dominant now, seems to me to be that globalization is basically, the
intensification, over the last two decades of the interconnection and
interdependence between all parts of the world, particularly at the levels of
economy and communication, such that former national barriers to the movement
of information, finance, goods services and entrepreneurship, are being
drastically reduced and everybody now has to compete with everybody in what has
now become global village and a single global market. This is presented as a
new phenomenon, marking a distinctly new epoch in world history, which has
roots in earlier periods, but which has come up, since the early 1980s,
sweeping everything before it.
According to
this conception disseminated every hour of the day, world-wide, by pundits,
academics, journalists and politicians, in newspapers, magazines, websites, and
on radio and satellite television, you either submit to the power of its
gale-force wind, or you are swept away and dumped, impoverished and
incapacitated on the margins of human progress; progress brought about by these
forces of globalization. This dumping away of the margins of human progress is
said to be what is happening to most of us in what is called, Sub-Sahara
Africa.
This notion of globalization appears on the surface to
be convincing. But does it capture the actual realities of the commemoratory
world economy, as it has developed since the early 1980s? Is this
globalization, as it is conceived in this widely disseminated way an
empirically valid concept? Does it really tell us what is happening to the
whole of mankind and to the relations between various parts of the world at the
levels of even only economy and communications?
Is it a
United States (US) scientific concept, correctly defining contemporary
realities, or is it merely an ideological construct, an effective marketing
slogan?
Considering
the global trade claim of globalization, this is the removal of barriers to
international trade and the expansion in this trade over the last two decades.
There is no doubt that the volume and value of international trade has grown
rapidly and in some of the sub-sectors of manufacturing, it has come to
increasingly involve the establishment of different stages of the production process
in different parts of the world. This is what is called spatial optimalization,
or off-showing.
But the fact
of the matter is that for the overwhelming majority of mankind who live in
Asia, Africa, South and Central America, the most important goods they produce
and live from are commodities derived from Agriculture, including livestock
rearing and fishing. The barriers to international trade in these goods in the
form of the heavy subsidies and other protection policies and practices of the
United States of America, the European Union and Japan, are still as high as
ever.
It is not
only the notion that we are living in a global village which is a fantasy. The
belief that the whole world is now largely one huge global free market is an
illusion. When we obtained and examine the concrete evidence about how the
contemporary world economy operates, revealed much more widely from the revelations
arising from the dramatic collapse of transnational corporations like Enron, we
realize that far from a global free market existing, we have a specific type of
international market organization which is highly regulated and manipulated by
the ruling elite of a handful of countries, to serve their purposes. These
elites use naked military force,
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