IMPACT OF INFORMATION TEHNOLOGY ON CORPORATE GOVERNANCE AND FINANCIAL REPORTING 1.0 INTRODUCTION
The introduction of the computer and advent of the Internet has changed the way we live in the modern world. This spans across every aspect of human life. Modern innovations have led to the description of the age in which we live as “the Information age”. Information technology and management therefore plays a vital role to the extent that timely access to Information could save a life while improper management of Information could lead to huge problems and losses of opportunities. In terms of Corporate governance and financial reporting, the financial implications of these losses could be great on corporate entities when quantified in monetary terms and this has led several companies to invest in finding better ways of improving on Information systems. Corporate scandals and failures across the globe including Enron, Worldcom, Daewoo Group (in Korea) and HIH (a major insurance group) in Australia, has raised serious questions about the way public corporations are governed around the world. This is usually characterized by managers who have been trusted with company control but due to conflicting/self interest, sometimes engage in actions that are profoundly detrimental to the interests of shareholders and other stakeholders. When managerial self-dealings are excessive and left unchecked, they often have serious negative effects on corporate values and the proper functions of capital markets. Around the world there is growing consensus that it is vitally important to strenghten corporate governance to protect the rights of shareholders, curb managerial excesses, and restore confidence in capital markets. Last year Nigeria witnessed the sacking of Managing Directors of five of Nigeria’s top banks namely Intercontinental Bank Plc, Union Bank, AfriBank, Oceanic Bank and FinBank. This was largely due to issues relating to Corporate governance and ethical code of conduct as most of these directors gave out unsecured loans in excess of Billions of Naira against the stipulated guidelines. According to the Central Bank of Nigeria, the management of the banks were sacked because they acted in a manner that was detrimental to the interest of their depositors and creditors. The CBN said the banks have liquidity challenges arising from their “huge” exposure to the capital market, petroleum marketing sector, specific large-ticket transactions and consequently “massive” non performing loans. This left one of the five banks “technically insolvent” and the other four undercapitalised. Corporate governance can be defined as the economic, legal and institutional framework in which corporate control and cash flow rights are distributed among shareholders, managers and other stakeholders of the company. Corporate governance and management has, as its primary objective, the enhancement of corporate profits and shareholder gain. i.e. corporate governance is basically rules and practices put in place within a company to manage information and economic incentive problems inherent in the separation of ownership from control in large enterprises and as dealing with how, and to what extent, the interests of various agents involved in the company are reconciled and what checks and incentives are put in place to ensure that managers maximize the value of the investment made by shareholders. In Corporate governance, key concepts are Corporate identity, Corporate communication, Corporate image and Corporate reputation. Corporate identity is the reality of the corporation. It is the unique, individual personality of the company that differentiates it from other companies. This is commonly referred to as the Corporate brand. Corporate communication is the aggregate sources, messages and media by which the company conveys its uniqueness or brand to its various audiences. Corporate image and reputation are in the eye of the beholder. Image is the mental...
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