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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 crossdisciplinary 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.


 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.


NATURE AND SCOPE OF GLOBALIZATION 1.1                      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


1W. James: “What is Globalization”, Globalisation101.Org. A keynote Address delivered at the 2nd International Conference on Corporate Governance at Mumbai on 18-01-2002, P.1. Available at January 2002. (Retrieved on 2008/3/8).

 2.  Ibid.  

Governance, which unleashed unprecedented volatility in markets, led to devaluation, default and capital flight, with the brunt borne by the poor. Reform on governance could no longer be viewed as a national or local issue for any corporation. Globalisationhas brought in its wake, the need for international coordination of efforts to ensure that growth is sustained and shared; sustained in that it is robust and can withstand shocks – and shared in that it brings prosperity to the many, rather than the few.

 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


3.                   Op. Cit. pg. 1.

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; 


4.                   Opp. Cit. pg. 2.

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


5.                  For instance, the Sarbanes – Oxley Act of 2002 passed by the United States in response to the  collapse of Enron, amongst others of her major corporations; the United Kingdom Combined  Code: Principles of Good Governance and Code of Best Practices of 1998, which was raised in 2003; the German 

Corporate Governance Code of 2002; the king Report on Corporate Governance for South Africa, 2002 all of which and more can be accessed at http:// codes / all codes. Htm. (Retrieved on 2008/3/8).

6.                  The OECD (Organization for Economic Corporation and Development) Principles of  Corporate Governance 1999, PMBL, available at /aboutgeneration index. Html; the Principles are currently under review. The World Bank has also proposed guidelines for good corporate governance in the financial sector because of the critical role of the sector as the main vehicle for robust economic growth and effective transmission of monetary policy, see J.O Sanusi” “Enhancing Good Corporate Governance. A strategy for financial sector Soundness”, keynote Address presented at the Dinner Nite of Chartered Institute of Bankers of Nigeria, November 8, 2002. Available at http:// / governance.htm. (Retrieved on 2008/3/8).

7.                  The Draft Revised Text of the OECD Principles of Good Governance, January 2004.

business ethics and corporate awareness of the environmental and societal interest of the communities in which a company operates can also have an impact on its Longterm success. 8

 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


8. OP. Cit. .

 law-abiding during the 21st century. This was based on the assumption that this progress towards a more lawful world would, almost automatically, grow on what used to appear to be the foundation of an unprecedented system of international law, built around the United Nations and its agencies, particularly the International Court of Justice and the various international conventions and treaties agreed upon since the second world war. These hopes and expectations have been rudely dashed.

International relations are increasingly sinking into disorder and chaos. 

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, 


the control of international organizations which they have hijacked and on an hourly basis, pervasive and intensive media campaigns of brain-washing, to enforce their laws and of their business, accounting companies and law-enforcement organizations, so that they always call the shots and can continue to corner most of the wealth produced in the world, giving to the rest of the world, very little, in return except pieces of paper. As for the information revolution which is presented as a major component of globalization, how much of a revolution has it been in terms of the exchange of actual information between different section of mankind and how much has it been a technological revolution, which has not even started to move towards realizing its exchange have been put into the service of marketing a consumerist way of life and marketing the market and its psychological, political and military underpinnings. 

1.2  The Meaning and Concept of Globalisation

  In most parts of the discourse on globalization, the impression created is that it is a new phenomenon. However, Wallerstein’s Collection of Essays9  provides a profound insight into the phenomenon as being at least two centuries old.  “In the nineteenth and twentieth centuries, there has been only one world-system in existence, the capitalist world-economy”. The point of emphasis is that, capitalism was from the beginning an affairs of the world-economy and not of nation states.” 


9.                  I. Wallerstein,  (1979) The capitalist World Economy: Essays, Cambridge University Press.  Essays is actually the subtitle of the book The Capitalist Economy by Cambridge University Press. One critical highlight of direct relevance in the book is the reality and historical process of uneven and combined development characteristics of the World Capitalist Economy.  This characteristics is now more popularly referred to in terms of “international division of labour” or “the inequalities of core and periphery”, to invoke Wallerstein’s exact description (p1).

 Thus, capitalism in essence has always been global in nature.  Under it, “economic activity is not only international in scope, it is also global in organization”.  Some analysts trace its origins even back to the 17th century, “when colonial empires began to crave out the globe in search of raw materials and new markets for their manufactured products”10.  In this perspective, Steingard and Fitzgibbons11 submit that “the globalization of capitalism is the contemporary manifestation of a system that evolved over several centuries, the primary purpose of which was to be the economic servant of western society12.”

 Pushing the discourse further into linguistic historical perspective, Walck and Bilimoria13 served the reminder that, “globalization as a unifying discourse used to be called ‘empire building.” The list of such empires include those of Roman, Mongul, British, Soviet and the American empires, “all political entities underpinned by military force which spread their ways of life across significant land masses and diverse populations as they extract economic benefits for the state through enslavement and taxation. 


10.               Gereffi, Gary et al (2001) Globalization Value Chains and Development, IDS Buletin Vol. 32 No. 2, pp 1-8.

11.               Steingard, David S and Dale E. Fitzgibbons (1995), challenging the Juggernaut of Globalization: A Manifesto for academic Praxis, Journal of Organizational Change Management, Vol. 8, No. 4 pp 31-54.

12.               On the economic front, the explanation is that, “In the Western Nations, market saturation and minimal population growth forced manufacturers to look elsewhere for receptive consumers and cheap labour (ibid, 9. 31). At a broader level, it is argued that objectively, globalization translates to an ideaology – hence it is not value free.  The primary objective of their effort really is ‘deconstructing the four myths of globalization; the myths being: globalization leads to one healthy world culture; globalization brings prosperity to persons and the planet; the global market spreads naturally, and management literature presents a value free representation of globalization.  All these are effectively challenged.

13.               Walck, Christa L and Diana Billimoria (1995), Editorial to the theme Challenging the Globalization Discourse, Journal of Organizational Change and Management, Vol. 8 No, 4.

To Sheth14, “globalization is a coalescence of different transactional processes and domestic structures allowing economy, politics, culture and ideology of one country penetrate another … underway since the 15th century”.

      However, the new globalization characterized by Williamson15    as

globalization renaissance, is unique in two critical respects, namely: (1) a liberalizing property – with emphasis on market deregulation; and (ii) primacy of transactional corporations (TNCs) as it is the carrier-like the old forms of globalization in which the carrier was the state.  This is without prejudice to the fact that the state remains an accomplice.  The processes that define this new, liberalizing globalization over the past two decades in particular, include the following16: (i) Rising flows of short-term foreign investment based on speculative currency trading; (ii) Increase in long-term foreign direct investment; (iii) Growth in world trade, with policies aimed at further reducing barriers to trade; (iv) Growing share of global production and trade associated with transnational corporations; (v) Accentuation of global interconnectedness of production, resulting partly from changes in technology of production and servicing; (vi) Increased movement of people for trade and labour purposes; (vii) Intensification of the global reach of new forms of communication, including television and internet.

 These processes and unique characteristics of the new globalization spawn a mixture of beneficial and penalizing consequences, globally and locally.  For example, its cited benefits include: increased specialization and efficiency, better quality products at reduced prices, economies of scale in production, competitiveness and increased output, technological improvement and increased managerial 


14.                  Sheth, V.S. (2000), Globalization and the South African, State, African Quarterly Vol. 40, No. 3 pp 45-66.

15.                  Williamson, Jeffrey G. (1997) Globalization and Inequality: Past and Present, Research Observer (World Bank), Vol. 12, No. 2: pp 17-133.

16.                  Deacon, Bob (2000); Liberalising Globalization: Challenges to Social Policy and Development, UNRISD Occasional Paper No. 5, Geneva.

capabilities17.  On the other hand, globalization is faulted for its negative consequences such as: increased inequality both within and between countries and increased impoverishment, increased social risks of rising unemployment and crime, increased chances of exclusion of individuals, communities, countries and regions from its potential benefits, and weakened capacity of government to fulfill its economic and social obligations to the citizenry, and the rapid spread of shocks and disturbances from one financial market to another18.

 It is evident therefore that the consequences of liberalizing globalization are far-reaching and of legitimate concern.  In particular, there are weighty misgivings about the consequences and the marginalized status of developing economies like

Nigeria.  This concern informed the tone of the Malaysian Minister’s speech at the

Uthant Distinguished Lecture in June 2001. In the speech, Dr. Mahathir Bin

Mohammed was both definitional and critical:

Globalization is today’s flavour.  However, it has turned sour even before it has been tasted by the majority of the people of the economies of the world.... Globalization is presently made synonymous with and exclusively about a totally free, unregulated world market.  It is absolutely tied to total deregulation within countries and between countries19.


17.   P. J. Obaseki, (2000): Globalization and the Nigerian Economy, CBN Economic and Financial Review, Vol. 38 No. 2 (June).

18.   Obaseki, Deacon and Bob (2000); Liberalising Globalization: Challenges to Social Policy and Development, UNRISD Occasional Paper No. 5, Geneva.

19.   Mahathir Bin Mohammed “Globalization, Global Community and the United Nations”,  at the U thant Distinguished Lecture series in Tokyo, Japan on June 7 2001. Excerpts of the speech are contained in the Guardian on Sunday, Lagos, July 8 2001; p.3.

If this sounds typical of the protesting voice of a weak player in the globalization game, observers from the highest benefiting point, United State of

America, interestingly share the pessimistic view that:

The unalloyed enthusiasm that accompanied the spread of globalization in the last decade is no longer with us.  It has fallen victim to unexpected financial crashes, important policy reversals such as those in Malaysia and Russia, and many unresolved problems with potentially disastrous consequences, from Japan’s fragile banks and China’s insolvent state enterprises to Brazil’s huge public debt…. Enthusiasm about globalization has also diminished in the face of other

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