Neither Principles nor Rules: Making Corporate Governance Work in Sub-Saharan Africa

Abstract

Corporate governance is often split between rulebased and principle-based approaches to regulation in different institutional contexts. This split is often informed by the types of institutional configurations, their strengths, and the complementarities within them. This approach to corporate governance regulation is mostly discussed in the context of developed economies and their regulatory demands. However, in developing and weak market economies, such as in Sub-Saharan Africa, there is no such explicit split and the debates on such contexts in the comparative corporate governance literature have been meagre. Nonetheless, there are sparks of good corporate governance practices in the region. Drawing from institutional theory and a case study of a largest economy, we explore the appropriateness or suitability of corporate governance regulatory frameworks in Sub-Saharan Africa. Our findings suggest that Nigeria needs an integrated system that combines elements of both rule-based and principle-based regulation, supported by a multi-stakeholder coregulation strategy. This paper departs from the mainstream rule-based and principle-based categorisations by forging ahead new perspectives on corporate governance regulation, especially in weak market economies. Keywords Corporate governance Á Sub-Saharan Africa (Nigeria) Á Principles-based Á Rule-based Á Co-regulation Á Institutional theory Á Culture This article majorly constitutes a part in Nakpodia, F. (2016).

Hide-and-seek in corporate disclosure: evidence from negative corporate incidents

“…We used an interpretivist philosophical standpoint in addressing the research problem pursued in the present study (Othman and Rahman, 2014; Atkins and Maroun, 2015; Nakpodia et al , 2016). This method of inquiry permitted authors to carry out content analysis of annual report information with a view to identify legitimisation strategies used by companies following occurrence of negative incidents or scandals.…”

Board gender diversity, audit committee and financial performance: evidence from Nigeria

“…Yet developing countries, particularly those in Sub-Saharan Africa, such as Nigeria, are patriarchal societies (Wadesango et al, 2011;International Finance Corporation, 2019), where men still dominate decision-making at both domestic and organisational levels. More importantly, African countries have weak legal and institutional frameworks (Chijoke-Mgbame and Mgbame, 2018; Nakpodia et al, 2018); Agyei-Boapeah et al (2020), with no explicit gender equality provision for corporate activities. Both formal (i.e., legal and regulatory) and informal (i.e., culture) institutions in Sub-Saharan Africa are weak and under-developed due to political instability, poor political leadership, conflicts and wars (United Nations Economic Commission for Africa, 2009;Nakpodia et al, 2018;International Finance Corporation, 2019;Agyei-Boapeah et al, 2020).…”

“…More importantly, African countries have weak legal and institutional frameworks (Chijoke-Mgbame and Mgbame, 2018; Nakpodia et al, 2018); Agyei-Boapeah et al (2020), with no explicit gender equality provision for corporate activities. Both formal (i.e., legal and regulatory) and informal (i.e., culture) institutions in Sub-Saharan Africa are weak and under-developed due to political instability, poor political leadership, conflicts and wars (United Nations Economic Commission for Africa, 2009;Nakpodia et al, 2018;International Finance Corporation, 2019;Agyei-Boapeah et al, 2020). For example, apart from a few Sub-Saharan African countries, such as Kenya and South Africa, legal institutions rarely support women at work (Hughes et al, 2017).…”

Progressive and Rational CSR as Catalysts of New Product Introductions

“…In turn, rational CSR activities aim to convey that a business is run sustainably from an economic perspective (Jamali et al 2008), and thus primarily address shareholders (Blanc et al 2019). It materializes into procedures to enforce compliance with external monitors (i.e., regulators and shareholders) (Nakpodia et al 2018). In addition, it includes activities pertaining to board monitoring mechanisms (including representation of non-financial stakeholders), the incentives alignment of the top management team, and the protection of shareholders' rights (Misangyi and Acharya 2014).…”