An Exploratory Study: To What Extent Do Companies Listed on the Nigerian Stock Exchange Comply with Corporate Governance and Risk Management Principles?

The main objective of this study is to ascertain the extent to which companies listed on the Nigerian Stock Exchange (NSE) comply with corporate governance and risk management principles, based on the assumption that directors of NSE-listed companies will, because of their awareness of the principles, “[ensure] that corporate actions, agents and assets are directed at achieving the corporate objectives established by the corporation’s shareholders” [1] (p. 28).
Using survey design, closed-ended questionnaires, and secondary data sourced from the Corporate Affairs Commission, the survey instrument was administered on 35 companies selected by random sampling (from a total population of 113), out of which 26 responses were received. The responses were statistically analyzed to measure the extent of the respondents’ awareness of, and compliance with, the principles. The Pearson correlation coefficient was employed to determine the relationship between the level of awareness of, and extent of compliance with, the principles.
The research results show that even though there is a high level of awareness of the principles amongst NSE-listed companies, “negligible/scant positive” [2] (p.163) correlation was established between the level of awareness of these principles and the extent of compliance by the companies. An implication of this scenario for managerial practice amongst the NSE-listed companies is that more corporate resources need to be deployed to strengthen the compliance function in these companies. Stronger measures/more positive steps are required to strengthen the compliance function in NSE-listed companies, to give a reasonable assurance that the deployment of corporate actions, agents and assets [1] by the directors of these companies will result in the achievement of the corporate objectives set by shareholders.