Enforcement structure enhance board performance in a developing economy

• Main Authors: Mande, Bashir, Ishak, Zuaini, Md. Idris, Kamil
• Format: Article
• Language: English
• Published: International Journal of Global Business (IJGB) 2014
• Subjects: HD28 Management. Industrial Management
• Online Access: http://repo.uum.edu.my/16194/1/96.pdf; http://repo.uum.edu.my/16194/; http://www.gsmi-ijgb.com/Pages/JMMV5N1.aspx

Purpose: Enforcement is reported as key to effective corporate governance.But in an emerging nation like Nigeria, where structures and enforcement mechanisms have been reported weak, there is the need to examine factors responsible. This paper takes steps towards developing a stakeholder perspective to examine any relationship between enforcement structures and board performance for effective corporate functioning.Methodology: Based on survey perceptions of 154 respondents from the Nigerian regulatory enforcement agencies and sampled public firms, the study employs confirmatory factor analysis (CFA) in a structural equation modeling (SEM) approach; a model that relates three enforcement structure variables to board performance is proposed.Findings: Building upon enforcement structure construct based on stakeholder framework, the study found the dimensions of regulatory capacity, monitoring compliance, and enforcement mechanisms as the valid measures.The study concludes that enforcement has significant effect on board performance.However, regulatory capacity indicators correlate as valid measures.Hence, confirmed through CFA and the structural model (SEM).Originality: The paper explores new research idea on board and focus on strengthening regulatory framework by Nigerian enforcement agencies.This adds to knowledge, enhances regulatory capacity and reduce conflicts of interests.The SEM approach exposes firms to an appropriate and efficient legal, regulatory and institutional foundation upon which all market participants can rely in establishing their contractual relations for effective functioning.