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A Meta-Analysis of Corporate Governance in a Developing Country

Updated: Apr 4, 2018

John J. Chizea, Araniyar C. Isukul

Department of Economics, Baze University, Plot 686 Cadastral Zone C00, Kuchingoro, Jabi-Airport Bypass, Abuja, Nigeria. Tel: +23480 78540336, E-mail:,

Department of Banking and Finance, Rivers State University of Science and Technology, Npkolu, P.M.B. 5080, Port Harcourt, Rivers State, Nigeria


There is an increasing body of research on corporate governance in Nigeria. This academic paper endeavours to classify, categorize, map and synthesize the research on this topic during 1998–2017. In the analysis of the body of research in corporate governance in Nigeria, five key themes emerge. (1) Several research studies focus on institutional influences of corporate governance and discussions centre on how a country’s culture, laws, regulations, norms and institutions inform corporate governance practice. (2) Other studies address concerted effort by international organizations and the Nigerian government to change corporate governance practices in Nigeria. (3) Further, studies have been conducted on the state of shareholder activism in Nigeria (4) corporate governance disclosure of publicly listed companies and (5) corporate governance and firm performance (6) corporate social responsibility in Nigeria. Based on the extensive review, missing perspectives on corporate governance research in Nigeria have been identified and propositions are made for future research directions.


Corporate governance has been defined extensively in the corporate governance literature (Trickster, 1984; Gillan & Stark, 2003; Larcker et al. 2005; Huse, 2007; Monks and Minnow, 2008); these definitions can easily be classified into two broad groups (narrow perspective and broad perspective of corporate governance). The narrow definition is as explained by Larcker et al. (2005) suggests that corporate governance generally refers to a set of mechanisms that influences the decisions made by managers when there is a separation of ownership and control. This definition is largely drawn from the agency theoretical literature which deals with the problems that arise from agency costs and are centered on the problems that result from shareholders delegating the responsibility of running the firm to managers (Jensen and Meckling, 1976; Hills & Jones, 1992; Kulik, 2005).

However, in many developing and transition economies this definition of corporate governance may likely be totally unsuitable as it fails to capture the systemic issues that lie at the heart of corporate governance (Oyejide and Soyibo, 2001; Oman, Fries, & Buiter, 2003). This includes the dearth of existing of institutional infrastructure that is fundamental corporate governance to thrive, the existence of these institutions are taken for granted in developed countries (Adegbite & Nakajima, 2012; Isukul and Chizea, 2015). Most developing and emerging economies have poorly defined property rights and judicial and regulatory institutions (Okike, 2007; Adegbite, 2012). For corporate governance to be inclusive, a broader definition is necessary to take into consideration the deficiencies of corporate governance in developing countries.

As such, the broader definition of corporate governance is needed, one that tends to go beyond the internal dynamics of the firm, its shareholders and managers to include institutional infrastructure such as political tradition, the rule of law, regulatory institutions(Ahunwa, 2002; Tsamenyi and Uddin, 2008; Wanyama, Burton and Helliar, 2013). Oman et al. (2003) emphasize that corporate governance comprises of a country's private and public institutions, both formal and informal, which together govern the relationship between people who manage corporations (corporate insiders) and others who invest their resources in the country. These institutions include the country's security laws, corporate law, accounting rules, acceptable business norms and practices (Ahunwan, 2002; Okike, 2007). In defining corporate governance in this context, it is possible to encapsulate the broader themes and influences of corporate governance in developing countries.

It is misleading to assume that corporate governance is not important for developing countries because developing countries are characterized by weak financial institutions, inadequately defined property rights, poor protection for minority investors, pervasive public and private sector corruption, and a small number of public listed companies (Claessens, 2006; Siddiqui, 2010; Agyei-Mensah, 2017). Nothing can be further from this narrow misconception of corporate governance. As a result of this narrative, the corporate governance literature has been framed within the context of principal-agency problem that fits the narrative of developed countries (Adegbite and Nakajima, 2012; Isukul and Chizea, 2015).

Consequently, while this description captures the issues, difficulties and problems of corporate governance in developed countries falls short in explaining the complexity, challenges and of corporate governance in developing countries (Wanyama, Burton, and Helliar, 2009;Adegbite & Nakajima, 2012; Nakpodia et al., 2016). This is so because corporate governance in developing countries is faced with peculiar challenges, hurdles and problems that are different from their developed country counterpart (Ahunwan, 2002; Oman et al., 2003; Tsamenyi and Uddin, 2008).

And as such, there is an enormous difference between the most important issues facing corporate governance in developed countries from that of developing countries. In developed countries, the most important problem facing corporate governance stems from the principal agency relationship problem (Gillan, 2006; Monks and Minnow, 2008; Brenan and Solomon, 2008). For developing countries, the most important challenges facing developing countries is the establishment of a rule-based system of corporate governance as opposed to the prevailing system of relationship-based governance, tackling vested interests, disaggregating pyramidal ownership structure, prevention of asset stripping, protection of the rights of minority shareholders and promoting the culture as well the practice of good corporate governance (Wanyama, Burton and Helliar, 2009; Adegbite, 2015).

There has been a limited amount of research on corporate governance in developing countries such as Nigeria, however all that is beginning to change, as corporate governance researchers in developing are increasing delving into researching corporate governance problems in developing countries (Wanyama, Burton and Helliar, 2009; Chanda, Burton and Dunne, 2017). This research is borne out of the need to review and assess the research on corporate governance in Nigeria, with a view of identifying what has been done, what is being done, what has been left out and to point in the direction of where future research in corporate governance in Nigeria should be focused on. The review will be an important tool not only for corporate governance researchers in developing countries but also for investors and policymakers who make either make decisions on investing in developing countries or develop policy framework guiding corporate governance policies and practices in developing countries.

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