CHAPTER 3 AND 4: MANAGEMENT CONTROL SYSTEMS IN SMALL AND MEDIUM SCALE BUSINESS

CHAPTER THREE

METHODOLOGY

This chapter provides an explanation on the manner and procedure of data gathering, data analysis which form the basis of the next chapter.

3.1 Research Design

The research design used in this research work is the survey design. This design is considered most appropriate as the study involves examining the population which in this case is the small and medium scale enterprises (SMEs) in Abi and collecting representative data from samples and analyzing them for results which answers the research questions.

3.2 Population Of Study

As mentioned above, the population of study is the small and medium scale enterprises in Abi Local Government Area of Cross River State. It therefore means that the study area is Abi Local Government Area.

3.3 Sampling Design

In order to decide on the sampling techniques to adopt, a listing exercise of all SMEs in the local government Area was conducted. The list was further categorized into two namely SMEs with and those without Agency relationship. A random sampling using the ballot system was taken from each category of SMEs after a sample size of 50 percent was decided on for each category. That is 50 percent of the SMEs with Agency relationship (which is 10 from the 20 recorded) and 50 percent of the SMEs without Agency relationship (which is 15 from the 30 recorded).

In each of the category, numbers were assigned to the SMEs and the required number of sample was selected. The ones selected in each category were served questionnaires which were successfully retired for analysis.

3.4 Survey Instrument

As stated above, the questionnaire instrument was used.
Questionnaires were served to the ten (10) and fifteen (150) selected
SMEs in each category.

3.5 Method of Analysis

The descriptive statistical analysis method was used to analyse the data obtained from the first section or part of the questionnaire. This analysis was base on the averages and percentages of the responses derived from the instrument. The analysis was used to answer the four research questions raised as presented in the next chapter.

3.6 Testing of the Hypotheses

In the testing the hypotheses raised in this study, the parametric statistics using the student t-test will be used. The formula used is given as;

T_cal = M₁ - M₂

(N₁-1) (S₁)² + (N₂ -1)(S₂)² 1 + 1

N₁ + N₂ - 2 N₁ N₂

Where M₁ = Mean of the first sample

M₂ = Mean of the second sample

N₁ = Sample size of the first sample

N₂ = Sample size of the second sample

S₁² = Variance of first sample

S₂² = variance of second sample

t_cal= The calculated value of t

Significance level = table value of t obtained from 1 – table

Degree of freedom = N₁ + N₂ - 2

Decision: Reject Null Hypothesis (H₀) if

T_cal> t_a,D.F

Conclusion

The relevant conclusion is drawn whether the null (H₀) hypotheses is to be rejected to accepted.

CHAPTER FOUR

FINDINGS

4.0 Introduction

4.1 Implication of Agency Relationship on effective segregation of duties

In this chapter, data generated from the respondents were presented and analyzed. The researchers have adopted a composite presentation of the question to make the presentation more concise and comprehensive. In order to qualify the responses more appropriately, the researcher employed such statistical tools as frequency tables: percentages, parametric and student t-test as mentioned in chapter three.

The researcher used the last part of this chapter to test the hypotheses formulated in chapter one of this work.

The student t-test was employed in this respect. The result of the test formed the bases of either rejecting or accepting the preconceived noted of the variable being tested (hypothesis).

Table 1: Implication of Agency relationship on effective segregation of

duties

RESPONDENTS
S/N	YES	%	No	%
5	6	60	4	40
6	8	80	2	20
7	8	80	2	20
8	9	90	1	10
9	9	90	1	10
Total	40	400	10	100
Average	8	80	2	20

Source: computed from questionnaire results, 2012.

The above table reveals that an average of 8 representing 80 percent of the SMEs in the category being investigated are of the opinion that Agency relationship has increased the practice of segregation of duties which enhances the productivity of their organization or business. 2 or 20 percent of them opined that agency relationship has not improved the segregation of duties in their organization or business.

Table 2: Agency relationship on physical security

RESPONDENTS
S/N	Yes	%	No		%
10	8	80 x 80 10		2	20
11	7	70		3	30
12	9	90		1	10
Total	24	240		6	60
Average	8	80		2	20

Source: computed from questionnaire results, 2012.

A close look at the table revealed that out of the ten (10) SMEs where Agency theory is practiced. An average of 8 representing 80 percent opined that Agency relationship has positively impacted on the physical security of their organization or Business. 2 or 20 percent were however of the opinion that agency relationship has impacted negatively on the physical security of their organization or business.

Table 3: Implication of Agency relationship on documentation and record keeping.

RESPONDENTS
S/N	Yes	Yes	No	%
13	9	90	1	10
14	9	90	1	10
15	6	60	4	40
16	8	80	2	20
Total	32	320	8	80
Average	8	80	2	20

Source: computed from questionnaire results, 2012.

The table reveals that an average of 8 or 80 percent of the SMEs in Abi LGA have adequate documentation and record keeping. It also shows that only 2 or 20 percent do not have adequate documentations or record keeping practice.

4.2 Testing of Hypotheses: In this section, Three (3) Null Hypotheses (H₀) will be tested against three (3) alternatives Hypotheses (H₁) to ascertain whether there is a significant effect of Agency relationship on the operations of small and medium Enterprises (SMEs) in Abi LGA of Cross River State.

Table 4: Implication of Agency Relationship on Management Override.

RESPONDENTS
S/N	YES	%	No	%
17	7	70	3	30
18	8	80	2	20
19	7	70	3	30
20	8	80	2	20
Total	30	300	10	100
Average	7.5(8)	75(80)	2.5(2)	25(20)

Source: computed from questionnaire results, 2012.

Here about 8 or 80 percent were of the opinion that Agency relationship has impacted positively on the management system even as management override has greatly reduced. The table also revealed that only 2 or 30 percent of the SMEs in Abi LGA opined that Agency relationship has no positive impact on management override.

TABLE 5: AVERAGE SALES OF SMES WITH AGENCY RELATIONSHIP AGAINST SALES OF THOSE WITHOUT AGENCY RELATIONSHIP

S/NO	SALES OF SMES WITH AGENCY RELATIONSHIP(X)	SALES OF SMES WITHOUT AGENCY RELATIONSHIP (Y)
1	551	355
2	473	340
3	502	376
4	551	389
5	535	358
6	562	411
7	528	333
8	521	322
9	562	414
10	543	379

Source: computed from questionnaire results, 2012.

4.2.1 Ho₁: Testing the hypothesis that Agency relationship does not have any significant effect on the operations (sales) of SMEs in Abi Local Government Area of Cross River State at 0.05 significance Level.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
55.1	35.5	1.8	3.24	-1.6	2.56
47.3	34.0	-6.0	36.0	-3.1	9.61
50.2	37.6	-3.1	9.61	0.5	0.25
55.1	38.9	1.8	3.24	1.8	3.24
53.5	35.8	0.2	0.04	-1.3	1.69
56.2	41.1	2.9	8.41	4.0	16.0
52.8	33.3	-0.5	0.25	-3.8	14.44
52.1	32.2	-1.2	1.44	-4.9	24.01
56.2	41.4	2.9	8.41	4.3	18.49
54.3	37.9	1.0	1.0	0.8	0.64
	39.9			1.8	3.24
	36.5			-0.6	0.36
	42.6			5.5	30.25
	36.0			-1.1	1.21
	34.8			-2.3	5.29
∑X=532.8	∑y=556.5		∑d²_x=71.64		∑d²y=131.28
N_x = 10	N_y =15
X=53.3	y =37.1

S²x =∑(d_x)²= 71.63 = 7.164

N 10

Decision: the t-calculated is -15.76 at degrees of freedom 23 and at 0.05 level of significance, from t-critical obtained from the t-distribution table in appendix.. is 1.71.

Conclusion: The calculated t-value is found to be -15.76 as the effect of Agency relationship on the sales of SMEs in Abi Local Government Area of Cross River State. Thus, the t- calculated value is not significant since it is less than the critical t-value of 1.71 given the 23 degrees of freedom and at 0.05 level of significance.

This implies that the null hypothesis will be accepted which means that Agency relationship does not affect the operations (sales) of SMEs in Abi LGA of Cross River State.

4.2 HO₂: Testing the hypothesis that Agency relationship does not have any significant effect on the expenditure volume of SMEs in Abi LGA, of Cross River State at 0.05 significance level.

TABLE 6: AVERAGE TOTAL EXPENDITURE OF SMEs WITH AGENCY RELATIONSHIP AGAINST TOTAL EXPENDITURE of those without AGENCY RELATIONSHIP

S/NO	TOTAL EXPENDITURE OF SMES WITH AGENCY RELATIONSHIP(X)	TOTAL EXPENDITURE OF SMES WITHOUT AGENCY RELATIONSHIP(Y)
1	388	164
2	335	165
3	366	155
4	388	146
5	398	136
6	400	158
7	339	140
8	340	139
9	400	159
10	344	134

Source: computed from questionnaire results, 2012.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
38.8	16.4	1.8	3.24	-1.9	3.61
33.5	16.5	-3.5	12.25	-1.8	3.24
36.6	15.5	-0.4	0.16	-2.8	7.84
38.8	14.6	1.8	3.24	-3.7	13.69
39.8	13.6	2.8	7.84	-4.7	22.09
40.0	15.8	3.0	9.0	-2.5	6.25
33.9	14.0	-3.1	9.61	-4.3	18.49
40.0	13.9	-3.0	9.0	-4.4	19.36
34.4	15.9	3.0	9.0	-2.4	5.76
	13.4	-2.6	6.76	-4.9	24.01
	24.3			6.0	36.0
	24.5			6.2	38.44
	30.3			12.0	144.0
	24.0			5.7	32.49
	21.8			3.5	12.25
∑X=369.8	∑y=274.5		∑d²_x=70.1		∑d²y=387.52
N_x = 10	N_y =15
X=37	y =18.3

S²x = ∑(d_x)²= 70.1 = 7.01

N 10

S²_y= ∑(d_y)² = 387.52 = 25.83

N 15

37.18.3 = -18.7

(9)(7.01) + (14)(25.83) . 1 1 (63.09 +361.62) (0.1+0.0667)

23 10 15 23

Decision: The t-calculated is 10.66 at degrees of freedom 23 and at 0.05 level of significance, from t-critical obtained from the t- distribution table in appendix … is 1.71.

Conclusion: The calculated t-value is found to be 10.66 as the effect of Agency relationship on the expenditure volume of SMEs in ABI LGA of Cross River State. Thus, the t-calculated value is significant since it is greater than the critical t-value of 1.71 given the 23 degree of freedom and at 0.05 level of significance.

This implies that the null hypothesis is rejected in favour of the alternative hypothesis. This shows that Agency relationship significantly affect the volume of expenditure of SMEs in Abi LGA of Cross River State.

TABLE 7: AVERAGE NET INCOME OF SMEs OF SMEs WITH AGENCY RELATIONSHIP AGAINST NET INCOME OF THOSE WITHOUT AGENCY RELATIONSHIP

S/No	TOTAL NET INCOME OF SMEs WITH AGENCY RELATIONSHIP(X)	TOTAL NET INCOME OF SMEs WITHOUT AGENCY RELATIONSHIP(Y)
1	163	164
2	138	165
3	137	155
4	162	146
5	136	136
6	162	158
7	190	140
8	181	139
9	162	159
10	199	134

Source: computed from questionnaire results, 2012.

4.2.3 Ho₃: Testing the hypothesis that Agency relationship does not have any significant effect on the net income of SMEs in Abi LGA of river at 0.05 level of significance.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
16.3	16.4	0	0	2.4	5.76
13.8	16.5	-2.5	6.25	2.5	6.25
13.7	15.5	-2.6	6.76	1.5	2.25
16.2	14.6	-0.1	0.01	0.6	0.36
13.6	13.6	-2.7	72.9	-0.4	0.16
16.2	15.8	-0.1	0.01	1.8	3.24
19.0	14.0	2.7	7.29	0	0
18.1	13.9	1.8	3.24	-0.1	0.01
16.2	15.9	-.01	0.01	1.9	3.61
19.9	13.4	3.6	12.96	-0.6	0.36
	11.6			-2.4	5.76
	12.0			-2.0	4.0
	12.3			-1.7	2.89
	12.0			-2.0	4.0
	13.0			-1.0	1.0
∑X=163	∑y=210.5		∑d²_x=109.43		∑d²y=39.65
N_x = 10	N_y =15
X=16.3	y =14

S²x =∑(d_x)²= 109.43 = 10.943

N 10

S²_y= ∑(d_y)² = 39.65 = 2.642

N 15

= 2.3

0.990959 = 2.321

Decision: The t-calculated is 2.321 at degrees of freedom 23 and at 0.05 level of significance, from t-critical obtained from the t-distribution table in appendix… is 1.71.

Conclusion: The calculated t-value is found to be 2.2321 as the effect of Agency relationship on the Net income of SMEs in Abi LGA of Cross River State. Thus, the t-calculated value is significant since it is greater than the critical t-value of 1.71 given the 23 degrees of freedom and at 0.05 level of significance.

This implies that the null hypothesis is rejected which means that Agency relationship significantly affect the net income of SMEs in Abi LGA of Cross River State.

CHAPTER FIVE

DISCUSSION

5.1 INTRODUCTION

This chapter discusses the major findings of the study.

5.2 DISCUSSION OF FINDINGS

· Inadequate small and medium scale enterprises exist in Abi Local Government Area of Cross River State. The situation in Abi is a reflection of what obtains in the entire state. The study revealed that most SMEs in Abi were merely sole properties for business that needs funding to survive in order to contribute to the state Economic growth.

· Agency relationship do not exist in most SMES in Abi Local Government Area and by extension Cross River State. The study indicated that Agency relationship exist in bigger SMEs and Public Limited Companies.

· Agency relationship does not affect the sales volume of SMEs in Abi Local Government Area as sales increase depend on many other factors which agency relationship does not influence.

· Agency relationship has significant effect on the expenditure volume of SMEs as show in the test of hypothesis result.

· Agency relationship has significant effect on the net income of SMEs in Abi Local Government Area.

· Agency relationship reduces the incidence of management override in SMEs in Abi Local Government Area.

· Agency relationship promotes segregation of duties in SMES as shown in the Abi Local Government case study.

· Agency relationship enhances documentation and record keeping among SMEs in Abi Local Government Area.

· Agency relationship increases the physical security of SMEs in Abi Local Government Area.

CHAPTER SIX

SUMMARY, CONCLUSION AND RECOMMENDATION

6.1 SUMMARY

In the course of the introductory analysis (chapter one), it was observed that an agent, is someone who brings another person called the principal into contractual relationship with third parties. An agent is a person who is given the authority by the principal to enter into a contract on his behalf.

Therefore, agency theory provides the framework for discussing the relationship that exists between the various interest groups in an organization. It views the firm as a composite unite consisting of separate group advocates it own interest and ensures it stands at an advantageous position in relation to the firm. The theory brings out a clear exposition of the actions of some managers who are not in shareholders and maximization objective is therefore pursued.

Unfortunately the agent who suppose to uphold the principle of fiduciary duty, a duty which includes the avoidance of conflict of interest and not to take secret profit, secret reward or secret commission or a bride, now revel in self interest pursuer putting in place management that services most a time the self interest that seem to be their paramount objectives as against the over all objectives of the firm. Thereby having goal divergent as against goal congruence.

A principal is the person who employs another person called, agent to act on his behalf.

Management in all business and organization activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. The managerial function of controlling is the measurement and correction of the performance of activities of subordinate in order to make sure that all levels of objectives and the plan devised to action them are being accomplished.

As a result of these observation and experiences the author of this project has undertaken this research to find out how, agency relationships can impact positively on the management control system so as to ensure shareholders wealth maximization. Thus, these studies very carefully pained out the similarities and more importantly the differences between previous researches and the current study.

The instrument employed for the data collection were questionnaires. The respondents included SMEs with and those without agency relationship. Based on the analysis made at end of each table chapter 4, the researcher summarizes that majority of small and medium scale business are without agency relationship in Abi L. G. A of Cross River State. The result of collaborate assertion that there is a significant effect of agency relationship on the operations of small and medium scale business in Abi L. G. A of Cross River State. Again, it was established that agency relationship has impacted positively on management system even as management override has greatly reduced. The result of table 4-4 attested to this.

6.2 CONCLUSION

The study of the implication of agency relationship on the operations of SMEs have been quite revealing. It clearly points out that Agency relationship is critical in maximizing business gains in particular and cooperate administration in general. Although the study is limited to small and medium scale enterprises, it can produce an amazing result if conducted on cooperate organizations both in the cooperate business world and in government.

6.3 RECOMMENDATIONS

The following recommendations are found necessary for government, Business Organizations and researchers.

(i) Government should evolve deliberate policies to develop small and medium scale enterprises as they constitute the bedrock of micro economic development in the state.

(ii) Government should promote accent to credit for SMEs through continuous funding of the bank of industries (BOI).

(iii) A tax regime that favours SMES should be put in place as a matter of urgency to arrest the imminent collapse of SMEs in the State.

(vi) Agency theory approach to business management should be embraced by all corporate business especially those registered in the corporate Affairs Commission.

6.4 RECOMMENDED AREAS FOR FURTHER RESEARCH

This research was limited to small and Medium Scale Enterprises. I therefore recommend that interested researchers wishing to investigate the implication of Agency theory should consider Public Limited Companies (PLC) for an expanded knowledge.

REFERENCES

Abrams, F.W, “Management’s Responsibilities in complex Word” Harvard Business Review 29, 1951, pp. 29-34.

Adamson, S., “The Esop As an employee Benefit: Its impact on firm value”, Benefits quarterly 9,.1993, pp. 55-64.

Anayamwu, J., Monetary Economic: Theory, Policy and Institutions. 1993, Hybrid Publishes, Nigeria.

Anthony, R. N. et al Management control System London; Richard d. iroin Inc, 5523 p. 1989.

Anumaka N.M. Management Account and control Aba; Matik Education Books (MEB) 2000 8771p.

Asika, N. (1991) Research methodology in Behavioural Sciences Ikeja, Longman Nigeria. 480 p.

Bryce J. and Nicholas H.A. (eds). Public Finance 1994, Liacholium.

Bum, P. and Derohurst, J. (1989) Small-business and entrepreneurship London; Macmillan. 580p.

Cochran, P. and R. Wood, “Corporate social Responsibility of financial performance”, Academy of management Journal 27, March 1984, pp. 42-56.

Conte, M and Kruse D. “Esops and Protit- sharing plans: do they Link employee pay to company performance”, Financial management 20, winter 1991, pp. 91-100.

Errunza, V. and Senbet, L. “The effects of International operations on the market value of the firm. Theory and Evidence discussion”, journal of Finance 36, may 1981, pp. 401.

Florkowski, G. and Shastri, K. “Stock-price response to protit sharing in unionized settings”, Journal of labor Research 13, fall 1992, pp. 407-420.

Hill, D and T. Jones, “Stakeholder-Agency Theory”, Journal of Management studies 29, March, 1992 pp. 131-154.

Jensen, I and Meakling W. “Theory of the firm”. Managerial Behaviour Agency cots, and ownership structure Journal of Financial Economics 3 1976 pp. 305-360.

Kratvetz, D, “Increase Finances through progressive management”, Magazine 36, February 1991 pp. 57-62.

Kumbhakar, S. and Dunbar, “the Elusive Esop-productivity Link: Evidence Fran U.S. firm. Level Data”, Journal of public Economic 52, September 1993 pp. 273-283.

Lang, L.G, R.M, Stultz and Walking, “A test of the free cash flow Hypothesis. The case of the Bidder Returns”, Journal of Financial Economics 29, 1991 pp. 315-335.

Lehn, K. and Poulsen, A. “Free Cash flow and Stockholder Grains in Going private Transactions”, Journal of Finance 44, 1989 pp. 771-789.

Lipsea R.G. An introduction of positive Economics 1963. Kedentied and Nicholson, London.

Taro, V. (1964) Statistic; An introductory analysis 3^rd Edition New York: Harpers and Row Publishers, 7728 p.

Thonadakis, S. “A value based Test of profitability and market structure’, Review of Economics and statistics 59 May 1977 pp. 179-185.

Ukoha, N. “Small Enterprises; A discourse in Development dynamics” Being a paper presented at the seminar organise by the Financial students Association, University of Port Harcourt, 1989 April p. 5.

Van H. J.C. Financial management and policy New Delhi; prentice – Hall of India private Limited, 1988 p 3881.

Wolf, F “Environmental Responsibility, stake holder theory, and the value of the firm”, Ph.D. dissertation, Kent State University Department of Finance (1993).

APPENDIX ONE

LISTING FRAME OF SMEs IN ABI LGA

1. Goddy Group of Enterprise Akpoha, Ekuneilu

2. Morgan Nig, Ekuneku Market Square

3. Philip’s Multipurpose ventures, Ekuneku market Square

4. Ify Ify MG, , Ekuneku-BE

5. Bongo’s Rice Mills, Ekuneku Market Square

6. Eka Elvis restaurant, Ekuneku Market Square

7. Yenoir multipurpose Nig. Egboronyi

8. Ben’s medicine stores, Ahbara

9. Madam Lawrence ventures, Ngarabe

10. Eja and Son’s, Anong, Ekureku

11. Esebonu De Great, Itigidi

12. Madam Grace computer centre, Itigi

13. Eko and son’s Farm, Egboronu,

14. KHA Ebong Inn, Adadama

15. Sis scholastically pharmaceutical, Ekureku

16. De young shall grow, Adadma

17. Innocent Egbe Pharmacy, Adadama

18. Iwasam business centre, Imabana

19. Chop alone Nig. Imabana

20. Enya King Nigeria - Imabana

21. Eka Awara Eating place - Imabana

22. Maryland Guest House - EDIBA

23. Ekabua Ventures - Ediba

24. Osim General merchandise, usumutong

25. J.J. Egwu Bookshop, Ebom

26. King Joe electrical company, Usumutong

27. All weather restaurant and Bar, Egboronyi

28. Prince Michael unlimited, Egboronyi

29. Fidel Wood work, Egboronyi

30. Never mind business centre, Agbara

31. Vincent transport, Ngarabe

32. Esege and sons, Itigidi

33. Madam blessing stores, Itigidi

34. Ziyemogo Industrialist, Ekureku-Be

35. Abonir the King Ent., Anong

36. Queen’s Mother Restaurant, Igbo Imabana

37. Chief Igiri’s business centre, Ebom

38. Chinyere Beautiful Gate, Itigidi

39. Etowa The best, Adadama

40. Christy Edu. Beauty Saloon, Adadama

41. Enerst the place to be, Igonigoni

42. Ovie’s centre, Afafanyi

43. Ogozi Bassey’s Stores, usumutong

44. Egbe Osam Electrocals, Bazoine

45. Helen’s Boutique, Lipalewa

46. St. Michaels Tailoring service, Itigeve

47. The young Buildders, Emminekpo

48. De Strong Iron Benders, Anong

49. All is well Medical centre, Mbaleke

50. No supporter Transport, Egboronyi

APPENDIX TWO

From the responses received from the questionnaire, it was observed that the SMES have Agency relationship in operation.

S/N	NAME OF SMEs	RESPONSE ABOUT THE OPERATION OF AGENCY RELATIONSHIP (Y/N)
1	Goddy Group Of Ent	No
2	MORGAN Nig.	No
3	Philip’s multipurpose	No
4	Ify Nig Ent.	No
5	Bongo’s Rice mill	Yes
6	Eka Elvis Restaurant	No
7	Yenoir multipurpose	Yes
8	Ben’s medicine stores	No
9	Madam Lawrence ventures	No
10	Eja and son’s	Yes
11	Eseboru De great	Yes
12	Madam grace computer	No
13	Eko and son’s farm	Yes
14	Icha Ebong inn	No
15	Sis. Scholastically pharmacy	No
16	De young shall grow	No
17	Innocent Egbe pharmacy	No
18	Iwasam Business centre	No
19	Chop alone Nig.	Yes
20	Enya King Nigeria	Yes
21	Eka awara eating place	No
22	Maryland enest home	Yes
23	Ekabua ventures	Yes
24	Osim General merchandize	Yes
25	J.J. Egwu bookshop	No
26	King Joe Electrical company	No
27	All wather restaurant	No
28	Princ Michael unlimited	Yes
29	Fidel wood work	No
30	Never amind business centre	No
31	Vincent transport	Yes
32	Esege and son	Yes
33	Madam blessing store	No
34	Ziyemogo industrialist	Yes
35	Abonor the King Ent	Yes
36	Queen’s mother restaurant	No
37	Chief Igiri’s Business centre	Yes
38	Chinyere Beautiful Gate	No
39	Etowa the Best
40	Christy Edu Beauty Saloon
41	Ernest the place of Be
42	Ovie’s Centre
43	Ogozi Bassey’s stores
44	Egbe Osam Electrical
45	Helen’s Boutique
46	St Michaes tailoring service
47	The Young Builders
48	De strong Iron benders
49	All is well medical centre
50	No supporter transport

APPENDIX THREE

S/NO	NAME OF SMEs
1	Bongo’s Rice mill
2	Yenior multipurpose
3	Eja and son’
4	Esebonu de great
5	Eko and son’s farm
6	Chop alone Nigeria
7	Enya king Nigeria
8	Mary Land Guest house
9	Ekabna ventures
10	Osim General merchandize
11	Prince Michael unlimited
12	Vincent transport
13	Esege and son
14	Iyemogo industrialist
15	Abonor the king Ent.
16	Chief Igiri’s business centre
17	Etowa the best
18	Ovie’s centre
19	Egbe Osam Electrical
20	No supporter transport

APPENDIX FOUR

LISTING OF SMES WITHOUT AGENCY RELATIONSHIP

S/NO	NAME OF SMEs
1	Goody Groups Of Enterprises
2	Morgan Nigeria
3	Philip’s multipurpose
4	Ify Nigeria enterprises
5	Eka Elvis restaurant
6	Ben’s medicine stores
7	Madam Lawrence ventures
8	Madam Grace computer centre
9	Icha Ebong Inn
10	Sis. Scholastically pharmaceutical
11	De young shall grow
12	Innocent Egbe pharmacy
13	Iwasam business centre
14	Eka Awara eating place
15	J.J. Egwu Bookshop
16	King Joe electrical company
17	All weather restaurant
18	Fidel wood work
19	Never mind business centre
20	Madam Blessing store
21	Queen’s mother restaurant
22	Chinyere Beautiful gate
23	Christy Edu Beauty Saloon
24	Enerst the place to be
25	Ogozi Bassey’s stores
26	Helen’s boutique
27	St. Michael Tailoring service
28	The Young builders
29	De strong iron Benders
30	All is well medical centre

SECTION B: TRANSACTION RECORD FOR THE PAST SIX 9(6)

YEARS 2005-2010

Year 1	Total sales N2	Total expenditure N3	Net income(N) 4 = 2 - 3
2005
2006
2007
2008
2009
2010

Appendix six

TRANSACTION RECORD OF SELECTED SMEs WITHOUT AGENCY

RELATIONSHIP (Y₁ - Y₁₀)

Total sales (N1000)							Total exp (N1000)						Net income (N1000)
S/N	1	2	3	4	5	6	1	2	3	4	5	6	1	2	3	4	5	6
Y1	200	312	330	385	415	490	80	150	170	200	250	300	120	162	160	165	165	190
Y2	265	296	300	389	390	400	125	150	150	200	210	215	140	146	150	189	180	185
Y3	203	302	345	412	489	505	103	152	200	224	300	350	100	150	145	188	189	155
Y4	265	250	318	454	500	545	125	130	209	300	315	380	140	120	109	154	185	165
Y5	215	300	311	380	455	488	105	165	180	210	285	390	110	135	131	170	170	98
Y6	213	395	320	400	515	625	108	275	200	205	305	425	105	120	120	195	210	200
Y7	215	230	308	350	412	480	130	158	178	180	212	300	85	72	130	170	200	180
Y8	125	300	348	345	400	415	60	158	200	205	220	255	65	142	148	140	180	160
Y9	300	310	350	497	425	600	150	155	200	308	300	415	150	155	150	189	125	185
Y10	326	316	330	405	415	480	206	248	270	265	215	265	120	70	60	140	200	215
Y11	290	302	319	400	412	430	200	150	200	290	300	318	90	152	119	110	112	112
Y12	301	314	331	385	427	430	198	202	212	240	300	318	103	112	119	145	127	112
Y13	420	381	415	429	450	462	300	281	300	318	300	320	120	100	115	111	150	142
Y14	260	318	343	413	400	426	110	200	219	300	295	315	150	118	124	113	105	111
Y15	218	300	324	400	428	418	110	152	165	274	300	309	108	148	159	126	128	109

CHAPTER THREE

METHODOLOGY

This chapter provides an explanation on the manner and procedure of data gathering, data analysis which form the basis of the next chapter.

3.1 Research Design

3.2 Population Of Study

3.3 Sampling Design

3.4 Survey Instrument

As stated above, the questionnaire instrument was used.
Questionnaires were served to the ten (10) and fifteen (150) selected
SMEs in each category.

3.5 Method of Analysis

3.6 Testing of the Hypotheses

In the testing the hypotheses raised in this study, the parametric statistics using the student t-test will be used. The formula used is given as;

T_cal = M₁ - M₂

(N₁-1) (S₁)² + (N₂ -1)(S₂)² 1 + 1

N₁ + N₂ - 2 N₁ N₂

Where M₁ = Mean of the first sample

M₂ = Mean of the second sample

N₁ = Sample size of the first sample

N₂ = Sample size of the second sample

S₁² = Variance of first sample

S₂² = variance of second sample

t_cal= The calculated value of t

Significance level = table value of t obtained from 1 – table

Degree of freedom = N₁ + N₂ - 2

Decision: Reject Null Hypothesis (H₀) if

T_cal> t_a,D.F

Conclusion

The relevant conclusion is drawn whether the null (H₀) hypotheses is to be rejected to accepted.

CHAPTER FOUR

FINDINGS

4.0 Introduction

4.1 Implication of Agency Relationship on effective segregation of duties

The researcher used the last part of this chapter to test the hypotheses formulated in chapter one of this work.

The student t-test was employed in this respect. The result of the test formed the bases of either rejecting or accepting the preconceived noted of the variable being tested (hypothesis).

Table 1: Implication of Agency relationship on effective segregation of

duties

RESPONDENTS
S/N	YES	%	No	%
5	6	60	4	40
6	8	80	2	20
7	8	80	2	20
8	9	90	1	10
9	9	90	1	10
Total	40	400	10	100
Average	8	80	2	20

Source: computed from questionnaire results, 2012.

Table 2: Agency relationship on physical security

RESPONDENTS
S/N	Yes	%	No		%
10	8	80 x 80 10		2	20
11	7	70		3	30
12	9	90		1	10
Total	24	240		6	60
Average	8	80		2	20

Source: computed from questionnaire results, 2012.

Table 3: Implication of Agency relationship on documentation and record keeping.

RESPONDENTS
S/N	Yes	Yes	No	%
13	9	90	1	10
14	9	90	1	10
15	6	60	4	40
16	8	80	2	20
Total	32	320	8	80
Average	8	80	2	20

Source: computed from questionnaire results, 2012.

Table 4: Implication of Agency Relationship on Management Override.

RESPONDENTS
S/N	YES	%	No	%
17	7	70	3	30
18	8	80	2	20
19	7	70	3	30
20	8	80	2	20
Total	30	300	10	100
Average	7.5(8)	75(80)	2.5(2)	25(20)

Source: computed from questionnaire results, 2012.

TABLE 5: AVERAGE SALES OF SMES WITH AGENCY RELATIONSHIP AGAINST SALES OF THOSE WITHOUT AGENCY RELATIONSHIP

S/NO	SALES OF SMES WITH AGENCY RELATIONSHIP(X)	SALES OF SMES WITHOUT AGENCY RELATIONSHIP (Y)
1	551	355
2	473	340
3	502	376
4	551	389
5	535	358
6	562	411
7	528	333
8	521	322
9	562	414
10	543	379

Source: computed from questionnaire results, 2012.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
55.1	35.5	1.8	3.24	-1.6	2.56
47.3	34.0	-6.0	36.0	-3.1	9.61
50.2	37.6	-3.1	9.61	0.5	0.25
55.1	38.9	1.8	3.24	1.8	3.24
53.5	35.8	0.2	0.04	-1.3	1.69
56.2	41.1	2.9	8.41	4.0	16.0
52.8	33.3	-0.5	0.25	-3.8	14.44
52.1	32.2	-1.2	1.44	-4.9	24.01
56.2	41.4	2.9	8.41	4.3	18.49
54.3	37.9	1.0	1.0	0.8	0.64
	39.9			1.8	3.24
	36.5			-0.6	0.36
	42.6			5.5	30.25
	36.0			-1.1	1.21
	34.8			-2.3	5.29
∑X=532.8	∑y=556.5		∑d²_x=71.64		∑d²y=131.28
N_x = 10	N_y =15
X=53.3	y =37.1

S²x =∑(d_x)²= 71.63 = 7.164

N 10

Decision: the t-calculated is -15.76 at degrees of freedom 23 and at 0.05 level of significance, from t-critical obtained from the t-distribution table in appendix.. is 1.71.

This implies that the null hypothesis will be accepted which means that Agency relationship does not affect the operations (sales) of SMEs in Abi LGA of Cross River State.

4.2 HO₂: Testing the hypothesis that Agency relationship does not have any significant effect on the expenditure volume of SMEs in Abi LGA, of Cross River State at 0.05 significance level.

TABLE 6: AVERAGE TOTAL EXPENDITURE OF SMEs WITH AGENCY RELATIONSHIP AGAINST TOTAL EXPENDITURE of those without AGENCY RELATIONSHIP

S/NO	TOTAL EXPENDITURE OF SMES WITH AGENCY RELATIONSHIP(X)	TOTAL EXPENDITURE OF SMES WITHOUT AGENCY RELATIONSHIP(Y)
1	388	164
2	335	165
3	366	155
4	388	146
5	398	136
6	400	158
7	339	140
8	340	139
9	400	159
10	344	134

Source: computed from questionnaire results, 2012.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
38.8	16.4	1.8	3.24	-1.9	3.61
33.5	16.5	-3.5	12.25	-1.8	3.24
36.6	15.5	-0.4	0.16	-2.8	7.84
38.8	14.6	1.8	3.24	-3.7	13.69
39.8	13.6	2.8	7.84	-4.7	22.09
40.0	15.8	3.0	9.0	-2.5	6.25
33.9	14.0	-3.1	9.61	-4.3	18.49
40.0	13.9	-3.0	9.0	-4.4	19.36
34.4	15.9	3.0	9.0	-2.4	5.76
	13.4	-2.6	6.76	-4.9	24.01
	24.3			6.0	36.0
	24.5			6.2	38.44
	30.3			12.0	144.0
	24.0			5.7	32.49
	21.8			3.5	12.25
∑X=369.8	∑y=274.5		∑d²_x=70.1		∑d²y=387.52
N_x = 10	N_y =15
X=37	y =18.3

S²x = ∑(d_x)²= 70.1 = 7.01

N 10

S²_y= ∑(d_y)² = 387.52 = 25.83

N 15

37.18.3 = -18.7

(9)(7.01) + (14)(25.83) . 1 1 (63.09 +361.62) (0.1+0.0667)

23 10 15 23

Decision: The t-calculated is 10.66 at degrees of freedom 23 and at 0.05 level of significance, from t-critical obtained from the t- distribution table in appendix … is 1.71.

TABLE 7: AVERAGE NET INCOME OF SMEs OF SMEs WITH AGENCY RELATIONSHIP AGAINST NET INCOME OF THOSE WITHOUT AGENCY RELATIONSHIP

S/No	TOTAL NET INCOME OF SMEs WITH AGENCY RELATIONSHIP(X)	TOTAL NET INCOME OF SMEs WITHOUT AGENCY RELATIONSHIP(Y)
1	163	164
2	138	165
3	137	155
4	162	146
5	136	136
6	162	158
7	190	140
8	181	139
9	162	159
10	199	134

Source: computed from questionnaire results, 2012.

4.2.3 Ho₃: Testing the hypothesis that Agency relationship does not have any significant effect on the net income of SMEs in Abi LGA of river at 0.05 level of significance.

X	Y	(x-x)	(x-x)²	(y-y)	(y-y)²
16.3	16.4	0	0	2.4	5.76
13.8	16.5	-2.5	6.25	2.5	6.25
13.7	15.5	-2.6	6.76	1.5	2.25
16.2	14.6	-0.1	0.01	0.6	0.36
13.6	13.6	-2.7	72.9	-0.4	0.16
16.2	15.8	-0.1	0.01	1.8	3.24
19.0	14.0	2.7	7.29	0	0
18.1	13.9	1.8	3.24	-0.1	0.01
16.2	15.9	-.01	0.01	1.9	3.61
19.9	13.4	3.6	12.96	-0.6	0.36
	11.6			-2.4	5.76
	12.0			-2.0	4.0
	12.3			-1.7	2.89
	12.0			-2.0	4.0
	13.0			-1.0	1.0
∑X=163	∑y=210.5		∑d²_x=109.43		∑d²y=39.65
N_x = 10	N_y =15
X=16.3	y =14