Corporate governance has gained significant global attention due to high-profile corporate scandals, excessive managerial compensation, abuse of corporate power, and financial crises, such as the one that began in 2007. At its core, corporate governance refers to the system of rules, practices, and mechanisms by which a company is directed and controlled. It serves to align the interests of managers with those of shareholders while safeguarding the rights of all stakeholders. According to La Porta, Lopez, and Shleifer (2000), corporate governance mechanisms enable outside investors to protect themselves against expropriation by insiders, highlighting its role in promoting transparency and accountability.
Effective corporate governance involves multiple parties, including the board of directors, the chief executive officer, management, shareholders, and regulatory bodies, all working collaboratively to ensure that corporations achieve their objectives. Failures in corporate governance are often linked to systematic deficiencies in accounting standards, financial reporting, and internal controls, which have been identified as major contributors to corporate collapses worldwide (Browen, Rajgopal, & Venkatachalam, 2003).
In response to these challenges, many nations, including Nigeria, have introduced codes of best governance practices to strengthen oversight, promote transparency, and ensure that managers’ decisions align with the goal of shareholder wealth maximization. These measures aim to prevent corporate failures, protect investor interests, and enhance the overall performance and sustainability of firms.
This study examines the principles and practices of corporate governance, highlighting the relationships between stakeholders, the mechanisms for oversight, and the impact of governance on corporate performance. It underscores the importance of regulatory frameworks, ethical leadership, and accountability in achieving effective corporate governance, which is essential for economic stability, investor confidence, and sustainable development in Nigeria and globally