Corporate Governance Compliance by Medium Scale Enterprises (SMEs): Global Review Perspective

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue IX, September 2020 | ISSN 2454–6186

Corporate Governance Compliance by Medium Scale Enterprises (SMEs): Global Review Perspective

Simon Peter Tsekpo
Kings University College, Accra, Ghana, West Africa

Abstract: This study reviewed selected studies on corporate governance and medium scale enterprises (MSEs) under different perspectives: in Ghana, the rest of African, Asia, Europe, and international perspective. The study adopted a literature review approach; and identified the following existing gaps in literature: the effect of corporate governance compliance on medium scale enterprises success (financial growth and expansion) should be further studied; studies on corporate governance of medium scale enterprises in Africa and the rest of the world generally lack clearly defined theoretical framework; and the impacts of social, cultural, legal, economic, and political factors on Medium Scale Enterprises compliance with corporate governance codes should be investigated. The review revealed that corporate governance compliance can greatly assist SMEs by infusing better management practices, stronger internal auditing, and greater opportunities for growth in Ghana and other countries of the world. The study recommends as follows: corporate governance awareness among SMEs in Ghana should be taken as a priority in order for them to adopt the principles of corporate governance best practices; and governments should set up unique corporate governance code for medium scale enterprises in Ghana in order to address their peculiar structure and needs.

Keywords: Corporate Governance, Corporate Practices, Governance Compliance, Literature Review, Medium Scale Enterprises

I. INTRODUCTION

The compliance status of Medium Scale Enterprises to codes of corporate governance in developing economies is in sharp contrast with that of the developed countries. While developed countries are showing a high degree of compliance, developing countries are far behind and most of the studies reflect non-compliance. Klapper and Love (2004) considered a group of emerging countries to understand their governance practices and the impact on firm performance. Garay and González (2008) reported the same trend in the case of Venezuela. Although they found a positive impact of compliance on firm-performance, they were concerned with their degree of compliance. The study therefore suggested that if Venezuela wants to sustain this positive impact on firm value, it needs to take immediate action to improve certain areas of governance, especially in the provisions of corporate governance. Compliance standard in Africa is similar to other developing economies.

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