CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Corporate governance mechanisms is concerned with the intrinsic nature, purpose, integrity, and identity of the institution with a primary focus on the entity’s irrelevance, continuity and judiciary aspects. It means that the governance involves monitoring and overseeing strategic direction, socio economic and cultural context, externalities and constituencies of the institution. Corporate governance mechanisms is also includes the relationship among the stakeholders involved in the goal for which the corporation is governed. Bank financial performance on the other hand, is the presentation of the summarized result of operation of an organization, this summarized result has helped to know the improvement of many banks in Enugu metropolis and also helps in relation of the financial aspect of corporate existence in Enugu metropolis. Sound corporate governance has becomes imperative for bank stability because it improve the performance of monetary polices in Enugu metropolis, especially in commercial banks of the metropolis which render retail-banking services and also provides current account that allow the use of cheques to the metropolis. Government in order to maintain macroeconomic stability, provide regulatory agencies that surprise and regulate some organization through the corporate affairs commission and other regulatory agencies like Central bank of Nigeria, securities and Exchange commission, Nigerian Deposit Insurance Commission, etc, but some of these regulatory agenesis have failed to carryout their responsibilities effectively. There has been greater demand for transparency requiring more requiring more reliable and accountable financial reporting that would ensure adequate protection of corporate stakeholders. This was because it was generally believed that the financial scandals in which people lost billions of dollars were caused by distortion in the corporate governance structure and financial performance of the affected organization operations leading to inefficient financial decision making. The fundamental concern of corporate governance mechanisms is to ensure the conditions whereby organizations directors act in the interest of there shareholders and to ensure that managers are held accountable to capital provides for use of assets. Therefore, it becomes a crucial element and necessary for the corporate governance system to function effectively (Wikipedia, free encydopedia 2006).
1.2 STATEMENT OF THE PROBLEM
Sound corporate governance is crucial for stability of corporate organization and markets that make up the economy. Corporate governance mechanisms is sustained by full disclosures, check and balances. Full disclosure by organizations also builds and sustains confidence in investors, shareholders, customers and regulators. So where there are corrupt and self-interest directors, managers and international auditors, financial performance position of an organization at any given point in time. Laxity of supervisor and regulatory agencies (CBN, SEC, NSE, NDIC, and CAC) on ensuring that corporate governance principles are adhered to in financial performance, also contribute to problems of poor financial performance and governance practice in organization. Many organization have corporate governance code and principle and sill fail to practice them. In some organizations, the overbearing attitude of organization CEO negatively affects organizations performance as they dictate what happens in the organization.