Systemic governance failures in Nigerian businesses are widely acknowledged, yet conventional diagnostic frameworks often lack the contextual specificity and collaborative engagement required to develop actionable, locally-owned solutions. This creates a persistent gap between theoretical governance models and practical implementation. This study aimed to develop and apply a participatory action research (PAR) framework to collaboratively diagnose specific, systemic governance challenges within a sample of Nigerian firms and to co-design contextually relevant interventions. A multi-cycle action research methodology was employed, involving four Nigerian companies across sectors. Data were generated through iterative cycles of problem identification, planning, intervention, and evaluation, using participatory workshops, semi-structured interviews, and document analysis with directors, senior managers, and key stakeholders. A dominant theme was the critical weakness of internal audit functions, with over 70% of workshop participants identifying them as under-resourced and lacking independence from management. The participatory process revealed that formal governance structures were routinely bypassed by informal networks of influence, undermining accountability mechanisms. The action research framework proved effective in surfacing deeply embedded, systemic governance pathologies that standard audits frequently miss. It facilitated a shift from generic compliance to context-sensitive governance strengthening. Firms should adopt participatory governance reviews to complement formal audits. Regulators should consider guidelines promoting the resourcing and independence of internal audit. Governance training must address the tension between formal systems and informal cultural practices. Action research, corporate governance, Nigeria, behavioural finance, institutional voids, participatory diagnosis This paper provides a novel, iterative framework for diagnosing and addressing governance challenges that integrates behavioural insights on decision-making biases with participatory action research, moving beyond prescriptive, decontextualised governance checklists.