ABSTRACT
Corporate
governance encompasses the legal and regulatory framework governing the actions
of firms, organizations, institutions, their internal policies and controls
established by the institutions themselves. The objective of corporate
governance is to ensure that the board and management act in the best interest
of all stakeholders. This study aimed at determining the influence of audit
quality in Access bank, Diamond bank, Ecobank, First bank, FCMB, GTB, Skybank,
Stanbic Bank, Union Bank, United Bank for Africa and Zenith Bank with reference
to 2006 code of corporate governance. The study made use of ex- post facto
research design. A sample of eleven banks were selected from a population of 22
banks quoted on the Nigerian Stock Exchange using judgmental sampling
technique. Data was collected through secondary source from published annual
financial reports (2007 – 2014), which was analysed using the Standard Ordinary
Least Squared Regression Model. The study revealed that Ownership concentration
of Nigerian banks in the post-corporate governance code has a positive but a
non-significant effect on banks audit quality for Nigerian banks( = 0.330; = 0.145 > 0.05).There was a positive and significant effect of
bank executive duality on the bank audit quality banks ( = 0.0.598; =
0.000 < 0.05) Nigerian
banks in the post-corporate governance period has a
positive and significant effect on board Size of Nigerian bank banks( =
0.449; = 0.0.0.0463
< 0.05) () in the post-corporate
governance period there was a positive and significant effect on banks’ audit
quality. The composition of Nigerian banks’ boards in the post-corporate
governance period has a negative and insignificant effect on banks’ audit
quality ( =
0.3368; = 0.2196 > 0.05.).
Composition of the audit committee in Nigerian banks in the post-corporate
governance period has a positive but non-significant effect on banks’ audit
quality( =
0.3049; = 0.6197 > 0.05). It was recommended that Proponents of large board
size believe it provides an increased pool of expertise because larger boards
are likely to have more knowledge and skills at their disposal, also are
capable of reducing the dominance of an overbearing CEO, and hence put the
necessary checks and balances.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The
financial distress, which has affected most of the Nigerian banks prior to the
2004/2005 bank consolidation exercise, has pushed up the demand for high
quality corporate governance. Adeyemi (2006) pointed out that the need for a
strong, reliable, and viable banking system is underscored by the fact that the
industry is one of the few sectors in which the shareholders fund is only a
small proportion of the liabilities of an enterprise. It is, therefore, not
surprising that the banking sector is one of the most regulated sectors in any
economy as is the case in Nigeria. Banking reforms have been an ongoing
phenomenon around the world right from the 1980s, but it was more intensified
in recent time because of the impact of globalization, which is precipitated by
continuous integration of the world market and economies (Adegbagu &
Olokoye 2008). Banking reforms involve several elements that are unique to each
country based on historical, economic, and institutional imperatives.
In
Nigeria, the reforms in the banking sector preceded against the backdrop of
banking crisis due to highly undercapitalization of deposit taking banks;
weakness in the regulatory and supervisory framework; weak management
practices; and the tolerance of deficiencies in the corporate governance
behaviour of banks (Uchendu 2005). Banking sector reforms and recapitalization
have resulted from deliberate policy response to correct perceived or impending
banking sector crisis and subsequent failures. A banking crisis can be
triggered by weakness in banking system characterized by persistent
illiquidity, insolvency, undercapitalization, high level of non-performing
loans and weak corporate governance, among others. Similarly, highly open
economies like Nigeria, with weak financial infrastructure, can be vulnerable
to banking crises emanating from other countries through infectivity (Adegbagu
& Olokoye 2008). Banking sector reforms in Nigeria are driven by the need
to deepen the financial sector and reposition the Nigeria economy for growth;
to become integrated into the global financial structural design and evolve a
banking sector that is consistent with regional integration requirements and
international best practices. It
Capitalization
has been an important component of reforms in the Nigerian banking industry,
owing to the view that a bank with a strong capital base has the ability to
absolve losses arising from non performing liabilities, improve its revenue,
and attain cost-efficiency. Attaining capitalization requirements may be
achieved through consolidation of existing banks or raising additional funds
through the capital market. An early view of bank consolidation was that it
makes banking more cost efficient because larger banks can eliminate excess
capacity in areas like data processing, personnel, marketing, or overlapping
branch networks (Somoye 2008). Consolidation is viewed as the reduction in the
number of banks and other deposit taking institutions with a simultaneous
increase in size and concentration of the consolidated entities in the sector
(Bank of International Settlement, 2001). Irrespective of the cause, however,
bank consolidation is implemented to strengthen the banking system, embrace
globalization, improve healthy competition, exploit economies of scale, adopt
advanced technologies, raise efficiency, and improve profitability (Adegbagu
& Olokoye 2008). Ultimately, the goal is to strengthen the intermediation
role of banks and to ensure that they are able to perform their developmental
role of enhancing economic growth, which subsequently leads to improved overall
economic performance and societal welfare they conclude. The government
policy-promoted bank consolidation rather than market mechanism has been the
process adopted by most developing or emerging economies and the time lag of
the bank consolidation varies from nation to nation (Somoye, 2008). For
example, what was termed “government guided” merger was a unique banking sector
reform implemented in 2002 by the Central Bank of Malaysia BNM (Bank Negara
Malaysia) guiding 54 depository institutions to form 10 large banks (Rubi,
Mohamed & Michael, 2007). This was partly a response to the banking crises
perpetrated by the 1997-1998 Asian financial crises, they noted. Bank of
International Settlement (2001) also noted that in Japan during the banking crises
of the 1990’s, government funds were deployed to support reconstruction and
consolidation in the banking sector....
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Item Type: Postgraduate Material | Attribute: 127 pages | Chapters: 1-5
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