The Role of Accounting in Corporate Governance: Comparative Approach Between Romania and Nigeria.

Doctoral Thesis

Scientific Supervisor:Prof. univ. dr. Dumitru MATIS

PhD Student:Ya’u Mohammed DAMAGUM

Cluj-Napoca 2009

Objectives: To ascertain the similarities and differences in corporate governance policies and the role of accounting information from the perspective of developing countries.

Methodology: Exploratory review and content analysis techniques were used to obtain data which were analyzed using multiple regression and one–way ANOVA.

Findings /Implications: National corporate governance codes share some policy commonalities, but also differ due to environmental differences. Corporate information disclosure among firms is

often low and explained by size among other factors. Environmental differences would prevent global convergence in corporate governance.

Further Research: Needed towards ascertaining the impact of codes on corporate governance and factors accountable for low corporate information disclosure.

The Role of Accounting in Corporate Governance: Comparative Approach between Romania and Nigeria.

Short Summary of Doctoral Thesis

Obiectiv: determinarea similarităţilor şi a diferenţelor în politicile de guvernanţă corporativă şi a rolului informaţiilor contabile din perspectiva ţărilor în dezvoltare.

Metodologie: Datele au fost obţinute prin recenzie exploratorie şi tehnici de analiză de conţinut, iar analiza a fost realizată prin regresie multiplă şi analiza varianţei (one-way ANOVA).

Rezultate/Implicaţie: Codurile naţionale de guvernanţă corporativă au mai multe elemente comune, însă diferă datorită diferenţelor de mediu. Prezentarea informaţiilor de către companii este de multe ori de nivel scăzut, ceea ce poate fi explicat, printre alţi factori, prin mărime. Diferenţele de mediu previn convergenţa globală în guvernanţa corporativă.

Cercetări viitoare: Este necesară determinarea impactului codurilor de guvernanţă corporativă şi a factorilor ce explică nivelul scăzut al prezentării informaţiilor de către companii.

Rolul contabilităţii în guvernanţa corporativă:O abordare comparativă între România şi Nigeria

Sinteza tezei de doctorat

IntroductionCorporate governance concept is reported to have been observed firstly by Adam Smith 1776 (Short et al, 1999; Solomon, 2008). The concept became prominent in recent years following the collapse of corporations like, BCCI and Enron.

Academic research interest in the topic also escalated leading to the accumulation of substantial volumes of literature addressing several issues relating to the topic. See for instance: Dalton et al., 1999; Shleifer and Vishny, 1997; Nicholson and Kiel, 2007).

Despite the massive volume of literature, the gap remains that most of the Studies focused on the developed countries with little coming from the Developing and evolving nations (Alsaeed, 2005) and no study has Investigated corporate governance code conceptualization relative to orientation towards accountability or the enhancement of enterprise though the need for such research has been identified by for instance Short et al. (1999).

This study is designed towards closing these gaps and is achieved by carrying out three empirical investigations as follows:

Investigation of the code contents and Conceptual focuses of US, Romanian and Nigerian Corporate Governance codes.

Assessing the quantum of voluntary information disclosure by

Romanian firms and the factors that explain such disclosure Choices.

Assessing the quantum of corporate governance information disclosure by Nigerian firms and the factors that explain such disclosure Choices.

Objectives of the StudyStudy One:

Ascertain the content similarities and differences amongstcorporate governance codes in the US, Romania & Nigeria.

Determine the conceptual orientations of the codes in thethree countries with reference to the attainment of accountabilityand enterprise.

Study Two:Ascertain the extent of voluntary information disclosure by firmsin Romania.

Determine if factors like, profitability and industrial groupingdo influence the pattern of such disclosures.

Study Three:Ascertain the pattern of corporate governance informationdisclosure by Nigerian firms and determine the influence if any offactors such as, size, profitability, international affiliation and thestatus of external auditors on such disclosure patterns.

Identify on general basis areas for further researches in the domains of both corporate

governance and voluntary information disclosure.

Research QuestionsSeveral research questions have been developed for purposes of the study.Among these questions are the following:

What are the corporate governance policy issues contained in thecorporate governance codes obtainable in the US, Romania andNigeria?

What are the conceptual orientations of such codes in terms ofthe attainment of corporate accountability and the enhancement ofentrepreneurial potentials of firms?

What is the volume of voluntary corporate information disclosed byRomanian firms through their annual reports, internet websites, etc?

Are the voluntary information disclosure choices of the Romanianfirms influenced by variables like profitability and industry grouping?

What is the extent of corporate governance information disclosureby Nigerian firms as determined through their, annual reports,internet websites and the compliance reports they render to theregulatory authorities?

Are the patterns of such disclosures influenced by factors such as,firm size, profitability, international affiliation and status of auditors?

Statements of HypothesesFor purposes of finding answers to the various research questions, a numberof hypotheses were drawn with reference to the tenets of relevant theories inboth the corporate governance and accounting information disclosure paradigms.Among these hypotheses are the following:

For reasons such as the collapse of many firms in recent years,not withstanding the free-market orientation of the US economy,the corporate governance code orientation in the country would behighly inclined towards corporate accountability than the enhancementof enterprise.

Due to Anglo-Saxon influence, corporate governance codes inNigeria would be oriented towards achieving entrepreneurialdevelopment though with some strong support also for corporateaccountability due to the recent crisis experienced in the bankingsector.

Levels of voluntary information disclosures are likely to be high amongfirms in Romania for reasons such as, the development of the capitalmarket, increased demand for corporate information among users suchas; existing shareholders, potential investors and financial analysts,which are direct consequences of the country’s transition from state toa free-market state.

Statements of Hypotheses, Cont’d

For reasons of international exposure and acquaintances withforeign experience such as knowledge of financial reporting, wefollowed Meek et al. (1995) to draw the hypothesis that the levelof international affiliation is expected to influence the voluntarydisclosure decisions of Romanian firms.

For reasons of differences in the level of political pressure,industry conditions and bandwagon effect, industry grouping isof the potential to influence the pattern of voluntary disclosureamong Romanian firms.

For purposes of wanting to project themselves in good light,so as to be attractive to both local and foreign investors, firmsin Nigeria would be disclosing adequate information for purposesof meeting corporate governance requirements.

Since the degree of foreign exposure increases the potential forhigher demand for information, and as argued by Raffournier (1995),the more international a firm is with regards to its operations the moreit is induced towards more information reporting, we would expectthe degree of international affiliation in the form of foreign equityparticipation to associate with the levels of corporate governanceinformation related disclosures amongst firms in Nigeria.

Literature ReviewLiterature review in respect of the study involves a review of both Theoretical and Empirical studies.

Theoretical literature:Under this segment we reviewed various theories lending support to ourstudies and the various conjectures and propositions conceived and

tested through the various hypotheses. Among the theories reviewed are:

Agency theory which seeks to demonstrate the need for managers to be monitored by the owners of firms so as to check the negative effects of managerial opportunism (Fama, 1980; Jensen and Meckling, 1976; La Porta, et al., 1999; Nicholson and Kiel, 2007).

Stewardship theory that seeks to establish the conception that managers are good stewards and would therefore naturally liked to work

in the interest of the owners of firms or shareholders which is a better option in the long run than seeking to maximize their personal interestsat present (Donaldson and Davis,1994; Donaldson, 1990). This also

goes along with the theory ‘Y’ assumptions of McGregor that humanbeings in organizations are likely to behave rationally.

Legitimacy theory assumes that firms are generally in social contracts with their immediate communities and therefore they need to be goodcorporate citizens and thus providing adequate information to

stakeholders in fulfillment of the nexus of that social contract (Gray et al.,1996; Mathews, 1993).

Literature Review Cont’dStakeholder theory which seeks to establish the duty of responsibility on firmstowards safeguarding the interests of collective members of the society including;employees, creditors, suppliers and the larger communities hosting the firms thussuggesting that the responsiveness of firms do not end with shareholders orowners alone (Charon, 1985; Clarkson, 2002 at www.mgmt. utoronto. ca, Donaldson and Preston, 1995; Jonge, 2006 at www.valuebasedmanagement.net.

In addition, the study reviewed literature relating to corporate governance evolution(Cadbury, 1992; OECD, 2004) and comparative analysis of corporate governancecodes (Hussain and Mallin, 2002; Hermes et al., 2007; Weimer and Pape, 1999).

Empirical LiteratureUnder the empirical literature, we reviewed several studies that focused on areas ofrelevance to our current focus and interest. In particular, the following categories ofstudies were considered:

Extent of accounting information disclosures and firm characteristicsstudies. These include contributions from, Wallace et al. (1994), Raffournier (1995), Meek et al. (1995), Alsaeed (2005) and Mihaela, 2007.

Corporate governance comparative studies which include thecontributions of; Ahuwan (2002), Reaz and Hossain (2005),Shu-Acquaye (2007) and Hermes et al. (2007).

Research Design

Data Collection

USA Romania Nigeria

Sarbanes-OxleyAct, 2002

Code 2000

Code 2003

BSE Code 2008

CBN Code 2006

Data Analyses

Content AnalysisCGD, MB, SRP, AFE, OSH

Conceptual AnalysisAccountabilityEnterprise

Results, Discussions and Findings

Statistical AnalysesDescriptive, Correlation and One-way ANOVA

Research design Study One

Comparative Analysis ofCorporate governance codecontents, Romania andNigeria with the US as thestandard of comparison.

Research Design

Sources of Data

Annual reports & accounts

BSE InternetWebsite& accounts

Reports toCNVMWebsite& accounts

Data CollectionExploratory reviews,Disclosure checklist

Data AnalysisDescriptive statisticsCorrelationOne-way ANOVA

Results, Analyses & Findings

Research Design: Study Two

An assessment of the quantum ofvoluntary information disclosure byfirms in Romania and the impact ofvariables including; profitabilityand industry grouping.

RESEARCH DESIGN

Review of Concepts and Theories

Review of Relevant Literature

Content Analyses & Data collection

Annual Internet OthersReports Websites

Data review and statistical analyses

Results and Findings

Conclusions Recommendations for further Research

Research Design and Methodology

Study Three An assessment of the extent of corporategovernance information disclosure byfirms in Nigeria and the impact ofvariables including; size, profitabilityand status of external auditors.

Methodological Approach

Data for purposes of the three empirical investigations were drawn fromthe following sources.

Study One:US—Sarbanes-Oxley Corporate Governance Act, 2002.Romania—Corporate Governance Code, 2000 & BSE Code, 2008.Nigeria—Corporate Governance Code, 2003 & CBN Code, 2006.

Study Two:Corporate internet websites for 65 Romanian firms both asmaintained individually and as contained in the BSE site.The second sources were reports to CNVM by firms.

Study Three:Annual reports, reports to SEC, the CBN and other regulators, andcompany News letters, magazines. This is in respect of samples of50 financial service and 50 non-financial service firms in Nigeriaselected through a cluster sampling process with a control for size.

Sources of Data

Methods of data collection

The methods used in collecting data were as follows:

Study One:Development of corporate governance policy fields comprising five items;the enhancement of corporate governance disclosure, modernization ofboards, protection of shareholders’ rights, enhancement of the auditfunction and the protection of the rights of other stakeholders. This withreference to COM-284 the EU corporate governance document and thusused as a standard following Hermes et al. (2007).

Content review of national codes to assess contents with reference to thestandard policy list developed.

Coding for the concepts, Accountability and Enterprise using 40 relatedwords each.

Review of national codes for purposes of determining word counts inrespect of the 40 coded words.

Study Two:Development of a checklist of voluntary information disclosure items. Atotal of 40 information items considered in line with lists from, Firth (1979),Raffournier (1995) and Meek et al., (1995).

Methods of Data Collection

Development of a disclosure scoring criteria awarding scores of 1-5 based on a Likertscale for items disclosed and ‘0’ otherwise. The total disclosure score for each firm thusobtained based on the formula:

Where: Tj is the disclosure of firm i in respect of individual items of disclosure.

Mi is the maximum number of items covered in the disclosure index.

di is the disclosure score of each individual item.

Study Three:Development of a corporate governance information disclosure index comprisingeight items in respect of both financial and non-financial service firms.

Weighting of information items based on the extent of disclosure thereby awardinga score of 1to 5 in cases where information is disclosed to some degree and ‘0’where no information is disclosed.Following Cooke (1992) and Meek et al. (1995), firms were exempted in cases where information item does not apply to them so as not to penalize such firms for items theyare ordinarily not expected to disclose.

m j

iij dT

5

Method of Data AnalysesThe methods of data analyses adopted in the study are as follows:

Study One:1. Following Fong (2004), the data collected was structured for analysis and validity measurements.

2. Verification of data through a second reviewer.

3. Data analyzed using SPSS statistical programme version 10.0.

4. Relationships amongst variables determined through correlation analysis.

5. use of independent sample t –test to as part of One-way ANOVA to ascertain the significance of the levels of the descriptive statistical results.

6. Depicting the relationships and results through graphical presentations (Pie-charts are used in this case).

7. Drawing inferences from the results.

Methods of Data Analyses Cont’dStudy Two:

1. The data collected is structured for verification and analysis.

2. Data processed using SPSS Statistical application as in the case of study one.

3. Descriptive analysis used to assess values of mean, minimum, maximum, other descriptive and the standard deviations.

4. Use of Z-test to ascertain the significance of differences amongst mean disclosure scores of classified companies.

Study Three:1. Use of descriptive statistics including; mean, minimum and maximum disclosure scores to ascertain extent of, and differences in disclosure levels.2. Use of ordinary least square regression model to estimate the relationship between the level of corporate governance disclosure (dependent variable) the independent variables including; size, profitability, international affiliation, etc.3. Use of Wilcoxon matched-pairs test to ascertain the significance or otherwise of the differences in disclosure levels between financial and non-financial service firms.

Method of Data Analysis Cont’d Study Three:

For purposes of estimating our regression parameters we thus applied thefollowing (OLS) Model:

CGD j = 0 + 1Sizej + 2 Profitability j +3 Audit j +4 Affiliation j +5 MKT valuation j + ℮j

Where:

CGD j = Corporate governance disclosure score level for firm j.

Size j = Size of firm j as measured by total assets.

Profitability j = Profitability level of firm j denoted by EPS.

Audit j = Status of the external auditor of firm j in terms of belonging to one of the big four or not.

Affiliation j = International affiliation of firm j denoted by level of foreign share ownership.

MKT valuation j = Market valuation of firm j represented by market price per share as at per share as at the last day of trading in the year 2007.

is the parameter to be estimated.

℮ is the error term.

Results and AnalysesAmong the various results obtained from the three empirical studies were the following:

Study One:The review of corporate governance codes shows the results of the threecountries in respect of the five corporate governance policy attributes.

Corporate Governance Policy Attributes (Fields) US Romania Nigeria Max. Exp.Score

% % % %Enhancement of corporate governance disclosure 64.00 44.00 56.00 100

Strengthening of shareholders’ rights 86.11 41.67 44.44 100

Modernization of boards 66.07 51.79 62.50 100

Strengthening of auditing functions 82.85 62.86 68.57 100

Protecting the interests of other stakeholders 21.88 31.25 15.63 100

A test of the differences in the mean scores further indicates that the three countries differSignificantly with regards to the contents of their corporate governance codes

Results and analyses Cont’dThe results of the conceptual analysis aspect of the investigation show among others:

The US code has words count intensity of 63.02 % for Accountability and 37.97 forEnterprise.A graphical presentation using a pie chart was used.

Enterprise

Accountability

63.02 %

37.97 %

In the case of Nigeria, the words count intensity ratio stood at 50.76 % for Accountability and49.24 % in respect of Enterprise. The pie chart presentation also appears thus.

Enterprise49.24 % Accountability

50.76 %

Results and Analyses Cont’dIn the case of Romania, the words count results show a ratio of 66.23 % to Enterprise and37.77 % to Accountability. The pie chart presentation also appeared thus.

Enterprise66.23 %

Accountability37.77 %

In the case of study two, among the main results are that:The levels of voluntary disclosures are generally very low with the highest itembeing Financial voluntary disclosures like analysis of sales and disaggregatingof expenses which had a mean score of 36.33 %. This is followed by disclosuresrelating to company policies attracting a mean score of 35.64 %. The last item,research and development disclosure, attained only a meager level of 15.61 %with only 16 out of a total of 65 firms disclosing such information.

Profitability levels and degree of international affiliation do not influence the levelsof voluntary disclosure by the firms sampled. A total of 50 firms with return on totalassets higher than 20 % had a mean disclosure score of 27.99 %. Firms withinternational affiliations, 48 in number, had a mean score of 28.34 % while a totalof 41 firms from the heavy industry sector, had a mean score of 29.36 %. Thesescores are not significantly different from the mean disclosure score of the entiresample which stood at 27.95 %.

Results and Analyses Cont’dDetails of such results are displayed in the following tables.

Category of disclosure

item

No of Companies

Disclosing item

Mean Score

%

Rank

Financial information 38 36.33 1

Company Policies 37 35.64 2

Social responsibility 27 31.11 3

Employee related information

32 30.66 4

Products & Services 40 28.97 5

Future Related inform. 18 19.06 6

Research and Develop. 16 15.61 7

Results and Analyses Cont’dSummary Statistics for the three categories of Romanian firms are as follows:

Firm Category Mean score

%

Std

Dev

No of

Firms

Profitability > 20 % 27.99 0.89 50

International Affiliation 28.34 1.84 48

Heavy Industry 29.36 1.78 41

These mean scores were compared to the grand mean score foe all the 65 firms which was 27.95 %

Results and Analyses Cont’dAmong the main results obtained from study number three are as follows:

Financial Institutions.

Variable Observations Mean Std. Dev. Min. Max.

Total disclosure 50 0.719 0.157 0.490 0.892

Non-Financial institutions.

Variable Observations Mean Std. Dev. Min. Max.

Total disclosure 50 0.652 0.370 0.50 0.833

Comparatively, both sets of firms had high mean disclosure levels going by the results. However,the Non-Financial sector firms tend to have higher scores both in terms of the mean and maximum.

Results and Analyses Cont’dFurther results were shown through the correlation matrices. Below is that of the Non-financialFirms.

Variables Total Discl. score

Size Profitability Int. Affiliation Market Valuation

Status of Auditors

Total Discl. Score

1.00

Size0.722* 1.00

Profitability 0.421* 0.291** 1.00

Int. Affiliation 0.570* -0.152 0.249** 1.00

Market Valuation

0.168 0.204 0.287** 0.173 1.00

Status of Auditors

0.369* 0.294** 0.118 0.483* -0.523* 1.00

* Indicates significance at 5 % level.** Indicates significance at 1 % level. Refer to page 272 of the thesis for the financial institutions correlation matrix and other details.

Results and Analyses Cont’d The summary of the OLS regression model results are as follows:

Group R2 R2 Adjusted F-statistics Sig. Durbin Watson

Non-Financial sector firms

0.583 0.467 4.883 0.00 1.831

Financial sector firms

0.791 0.582 6.519 0.00 1.337

What the results suggest is that in the case of the non-financial sector firms, about 46.70% of the variationsCorporate governance disclosures are explained by a combination of the five variables incorporate in ourmodel. Similarly, in the case of the financial service firms, the value of R2 adjusted at 0.582 indicates thatthe variables captured in our model explains about 58.20 % of variations in corporate governance disclosurein that sector. Though in both cases, the model results are significant, the fact that the R values are notparticularly high, suggests that there are other variables that interact with the disclosure choices of firms inthe two sectors.As shown in the results the values of Durbin Watson and the Variance inflation factors (VIF) were checked forpurposes of ascertaining the effects of autocorrelation and multicollinearity on the results.

FindingsThe study through the three empirical investigations arrived at a number offindings which were linked to our research questions, hypotheses and existingfindings available in the literature.Among the major of such findings are the following:

The corporate governance codes obtainable in the US, Romania and Nigeria, sharea common characteristic of containing policies relating to five major areas whichinclude; compliance with corporate governance disclosure, strengthening of shareholders’rights and the modernization of boards. This goes to answer our research question inrespect of the contents of the codes and the hypotheses. It is also in line with findings byShu-Acquaye (2007) that the US, Sarbanes-Oxley Act, do share some commonalities withthe EU COM-284 which we have used as a standard for our analysis.

The corporate governance codes of the three countries also differ in respect of the preferencestowards governance attributes like, the strengthening of the rights of shareholders, protectionof the rights of other stakeholders and the strengthening of the Audit function. This is in linewith earlier observations by Hermes et al. (2007) and Bobirca and Michlause (2008) thatcorporate governance codes are differing among countries due to differences in social, politicaland economic development levels amongst others.

The corporate governance code conception in the US is accountability oriented while the twoCodes in Romania show more tendency towards the enhancement of enterprise. TheNigerian codes though inclined towards accountability also show relatively high inclinationtowards the enhancement of enterprise. These findings tend to confirm our propositionsand hypotheses regarding the code contents of the three countries. They are also consistentwith the views of Short et al. (1999) that many corporate governance codes are accountabilityoriented which may affect entrepreneurial development of firms.

Findings Cont’dThe quantum of voluntary corporate information disclosed by Romanian firms is very low.

There is also no significant relationships between corporate variables like; profitability andinternational affiliation and levels of voluntary disclosure which failed to agree with ourhypotheses to these effects.

However, industry classification tends to influence Positively the level of such disclosures.this finding is consistent with those of Mihaela (2007).

The level of corporate governance disclosure is relatively high among both Financial andNon-financial service firms in Nigeria.

Factors including size, profitability and the status of auditors do influence the corporategovernance disclosure choices of Nigerian firms. This is in line with findings like those of;Meek et al. (1995) and Raffournier (1995) who observed the influence of size and profitabilityon the voluntary disclosure preferences of UK, US and Continental European Multinationals,and Swiss firms respectively. However, the positive influence of the status of auditors iscontrary earlier findings by Wallace et al. (1994) and Naser et al. (2002).

Factors like the degree of international affiliation and market valuation do not convincinglyInteract with the corporate governance disclosure choices of Nigerian firms generally. Thesefindings are also in line with those of Cooke (1992) and Camfferman and Cooke (2002).

These findings relate significantly to our hypotheses, propositions and suppositions and alsoprovided the basis for answering the various research questions raised in the study.

Implications of the Research Findings

Among the implications of the research findings noted are the following:

Differences in the corporate governance codes of individual countries means it will be verydifficult to achieve global convergence in corporate governance in the short run.

Over emphasis on accountability in the governance framework in the US and other similarCountries is of the potential to reduce entrepreneurial development of firms.

High emphasis on entrepreneurial development as observed in the case of Romania is alsoof the potential to reduce the effectiveness of corporate regulation with agency problemimplications.

Low volume of voluntary information disclosure can deter potential investors from investingin Romanian firms which can affect the flow of foreign investment into the country withnegative implications on the country’s over all economic development potentials.

The level of corporate governance is likely to be affected due low level of monitoringinformation made available to regulators and other stakeholders.

The relatively high level of corporate governance disclosure among firms in Nigeria impliesthat firms in that environment may be disclosing such information so as to influence the perceptions of investors about their performance.

ConclusionsAmong the various conclusions arrived at through this study and its processes are the following:

Corporate governance codes across various countries as demonstrated by the cases of the US,Romania and Nigeria do share some commonalities which results from cultural, economic andother ties among countries (see Hermes et al., 2007; Shu-Acquaye, 2007 and Bobirca andMiclause, 2008).

Despite such noted similarities, the codes would continue to differ in line with the individuallocal characteristics in different countries thus creating possible difficulties towards globalconvergence of corporate governance systems. This goes in line with the observations ofSolomon (2008) and Mallin (2002).

Our hypothesis regarding the expectation of high level of voluntary disclosure among RomanianFirms does not hold as the level of this disclosure is found to be low. This goes to confirm anEarlier conclusion by Mihaela (2007) that firms in the country do not disclose adequate amountsOf information. This also probably has to do with the observations that managers and accountantsin practice do not seem to be conversant with international standards of financial reporting (PriceWaterHouseCoopers, 2006; Tiron Tudor and Muller, 2007).

The low level of corporate information disclosure is likely to have reducing effect on the level ofConfidence that investors would have on Romanian firms which also goes to affect the levels ofForeign investment flows. This is more so as corporate information has been linked to decisionPreferences of investors (Whittington, 1993) and also corporate governance (Cadbury, 1992).

Conclusions Cont’dWhere high volumes of corporate governance information are provided, the is the tendencyFor corporate regulators and other stakeholders to be able to monitor the activities of firmsAnd their managers, a situation that promotes high quality governance of firms.

Corporate governance information disclosure is likely to be affected by factors such as sizeAnd profitability while other attributes like; the level of international affiliation and marketValuation of firms may not serve as explanatory variables in such disclosure choices.

Corporate governance mechanisms and processes are evolving subject to the dictates andevents in the corporate environment. The study of corporate governance would continue togather momentum since the corporate environment is ever dynamic. That is to suggest thatresearch in corporate governance would continue to escalate in future towards uncoveringmore issues surrounding the concept. Some of these issues we have tried to point out throughour suggestions for further research.

LimitationsThe study and its various processes are subjected to a number of limitations which need tobe taken into account when interpreting the results and the various conclusions. Among theselimitations are the following:The choice of only Sarbanes-Oxley Act as the US corporate governance code probably musthave reduced the value of information available for our research since there are several othercorporate governance codes obtainable in that country.

In our conceptual analysis, we adopted a word coding approach as opposed to sentences,paragraphs or phrases, probably, different results could have been obtained if these otherapproaches have been opted for.

Our sampling of firms in the Romanian case study was restricted to firms with active internetWebsites. Probably, some firms that do disclose vital corporate information through otherMedia could have been left out of the study.

We have also applied Likert scales in awarding disclosure scores in both the Nigerian andRomanian disclosure studies. This approach probably could have induced some elementsof subjectivity in the scoring processes.

Suggestions for Further ResearchFollowing the findings and conclusions from the study, the need for further research appears vitalin these areas:Since corporate governance mechanisms are very much dependent on the flow of corporateInformation (Solomon, 2008) there is need for more investigations towards determining the extent towhich firms generally provide such information to users.

More investigations are required towards ascertaining the adequacy or otherwise of corporategovernance codes as part of the corporate governance framework. To this effect, there are a numberof questions being asked as to whether corporate governance is better achieved through marketregulation or public regulation involving the use of codes?

As firms continue to collapse despite the increased tempo towards ensuring corporate governance,more is needed for instance towards researching and establishing the role of Auditors in the governanceprocess as earlier suggested by Baker and Owesen (2002).

In the Romanian context, there is the need for further investigations towards ascertaining the reasonsfor the low and poor quality of corporate information disclosure as observed by previous literature(Mihaela, 2007).

There is equally the need for further investigations towards ascertaining the possibilities of factorslike; firm size, auditor status, leverage, and age on the levels of disclosure. This is necessary sincemost of these factors have been tested in several domains in the literature with varying results (seefor instance; Firth,1979; Cooke, 1992; Raffournier, 1995 and Wallace et al. 1994) but so far, no studhas considered such factors in the Romanian environment.

Vote of ThanksThe process of this thesis enjoyed your various support through comments, observationsand useful suggestions. These went a long way in bringing the work to the current stage,and for this, I would like to thank you all on behalf of my supervisor and my self.

Scientific SupervisorProf. Univ. dr. Dumitru Matis

PhD StudentYa’u Mohammed Damagum

Cluj-Napoca2009