Corporate governance dynamics in financial institution performance: A panel data analysis

<p><em>Corporate governance is relevant in both developed and emerging economies. The study investigated the impact of corporate governance on organisational performance, using thirty (30) randomly selected listed companies in the Nigeria Stock Exchange (NSE) in the year 2016. The study focused on three corporate governance variables (i.e., Board Size, Board Independence, CEO Duality/Tenure); and two performance variables - i.e., Returns on Asset (ROA) and Returns on Equity (ROE). The study does not cover the market measure performance variable of Tobin’s Q. The study is an empirical research, with analytical research design. Secondary data, extracted from published annual reports of selected quoted companies and NSE website, is used for the study. The findings revealed a positive correlation between board size, independence directors, and performance variables; but, showed a negative correlation between CEO tenure and performance variables. The result showed that number of directors was not positively related to performance in selected quoted companies in terms of ROA; but, it revealed a positive correlation between board size and performance in terms of ROE. It also showed that the correlation between CEO tenure and performance variables was negative on the two performance variables (ROA and ROE). Regarding relationship between CEO Duality and performance variables (ROA and ROE), the result showed that CEO Duality has a positive correlation with ROA; but had a negative relationship with ROE. Generally, the study revealed that adoption of sound corporate governance practices by listed companies can improve their performance. Companies can benefit from this improved corporate governance practices by way of increased investment from investors and reduced capital cost. Shareholders confidence would be enhanced with attendant improvement in shareholders wealth. The nation’s economy would also benefit from sound corporate governance practices by way of improved GDP. </em></p>

Corporate Governance Practices and Firm Performance: Evidence from Top 100 Public Listed Companies in Malaysia

PurposeThis study aims to investigate the relationship between corporate governance (CG) and financial performance in the case of publicly listed companies in Vietnam for the period from 2019 to 2021. The topic is crucial in understanding how effective governance practices can influence the financial outcomes of companies. The study sheds light on the link between CG practice and firm financial performance. It also provides insights for policymakers and practitioners to improve CG practices.Design/methodology/approachDue to the potential dynamic endogeneity in CG research, this study uses the generalized system methods of moments to effectively address the endogeneity problem. Financial performance is measured by Tobin’s Q, return on equity (ROE) and return on assets (ROA). Based on organization for economic cooperation and development (OECD) standards, these indices were calculated to assess the influence of CG practices on corporate financial performance, namely, for accounting information (ROA and ROE) and market performance (Tobin’s Q and service à resglement différé (SRD) – stock price volatility) for the period 2019–2021. In addition, the study examines the relationship between changes in the CG index and changes in financial performance.FindingsThe study’s main objective is to determine the relationship between CG performance scores and financial performance. The study found a positive relationship between transparency disclosure and financial performance and a positive correlation between CG and company size. The COVID-19 pandemic caused a decrease in transparency and information index scores in 2021 compared to 2019 and 2020 due to delayed General Meetings of Shareholders. The study failed to find a relationship between shareholder rights index (“cg_rosh”) and board responsibility (“cg_reob”) and financial performance, concerning which the findings of this study differ from those of previous studies. Reasons are put forward for these anomalies.Originality/valuePolicymakers need to develop a set of criteria for assessing CG practices. They also need to promulgate specific regulations for mandatory and voluntary information disclosure and designate a competent authority to certify the transparency of company information. The study also suggests that companies should develop CG regulations and focus on regulations relating to the business culture or ethics, as well as implementing a system to ensure equal treatment among shareholders. The study found that good CG practices can positively contribute to a company’s financial performance, which is crucial for investors to evaluate the quality of CG practices for each listed company so that investment risks can be limited.

The study was undertaken to investigate how corporate governance practices can influence the financial performance of microfinance institutions with a case study of microfinance inking ltd. This study specifically analyzed the effect of board size, gender diversity and CEO duality in the governance structures on performance of microfinance institutions. The descriptive method was used to collect data and the target population was forty-six, where 35 were the staff of INKINGI microfinance ltd 11 were members of the board. In data collection at the field, questionnaire and face-to-face discussion were used. To confirm the reliability, the research conducted a pre-test exercise before the actual data collection process. The validity was tested through experts in the domain of financial statements analysis and managerial decision making by asking the supervisor and other lecturers from Mount Kenya University. The researcher used the SPSS as tool of analysis, which helped to summarize the primary data into quantitative data and the researcher given the proper interpretation of the results basing on research objectives and questions. The analysis showed that board size, board independent and CEO duality were positively correlated with financial performance of Rwandan microfinance institutions (r= 0.810, p< 0.00 r= 00.706, p< 0.04 r= 0.623, p< 0.003 and r= 0.431, p< 0.00) respectively. Furthermore, the research showed that the board independence, gender diversity as well as board size have a considerable effect on financial contribution. According to the perception of the respondents, the results showed that corporate governance increases the profitability of the company, customer loyalty as well as extension of product line and services in the company. The study concluded that board size, board independent and CEO duality are important aspects to consider for better governance of microfinance. The study recommended that INKINGI microfinance ltd should improve their gender diversity for better corporate governance that provides diverse viewpoints, values and new ideas to the boards and provokes lively boardroom discussions. The management should appoint more women directors as they possess managerial skills like public relations, human resource and communication skills than operating and marketing skills. Keywords: Corporate governance practices, financial performance, microfinance institutions, Inkingi Ltd, Rwanda

Editorial – Toward a Global Theory of Corporate Governance

Corporate governance has drawn attention of investors and government after the incidence of financial crisis world- wide since the late 90’s. Despite that reforms of corporate governance have been in place in Malaysia, voluntary disclosure of corporate governance has yet to proof its impact on the financial performance of the companies. This study examines the relationship between corporate governance attributes and firm financial performance in Malaysia. The relationship between board characteristics (board tenure, board size and CEO duality) were analyzed to investigate their correlation with firm financial performances. A total of 100 public listed companies were randomly selected from Bursa Malaysia for the year 2009 to 2013. Random effect panel data regression was obtained by using Stata. This study finds that board size, board tenure were significant to Return on Equity (ROE) and Return on Assets (ROA). However, firm size has no significant relationship with firm financial performance. It is recommended that apart from including more variables as controlling effects on firm financial performance and examining few industries as sample, it is also good to examine the correlation between board characteristics and corporate governance variables (foreign listings, equity analysis, external auditors, leverage ratios, dividend policy, etc.) on one hand, and ownership structures on the other hand, that have significant impact on firm financial performance.

This paper empirically analyzed the relationship among corporate governance, financial performance, and microfinance banks' sustainability in Nigeria. The data for the study were collected from 133 respondents, who were selected from ten (10) licensed microfinance banks in Lagos state. Descriptive statistics and regression analysis were employed to analyze the relationship that exists among corporate governance, financial performance, and microfinance sustainability. The study found that board size (BS) and Bank size (MFBS) have a statistically significant positive impact on Return on Asset (ROA). It shows that a 1 percent point increase in Board size and Microfinance Bank size (MFBS) will increase Return on Asset (ROA) by 0.081 and 0.28 percent, respectively. The study also established that corporate governance is a major determinant of the financial performance of MFBs. This result further reflects that a coefficient value of 0.94 that exists between board size (BS) and equity (EQ) implies that corporate governance (BS) influences the financial performance (EQ) of MFBs. The study concludes that corporate governance and financial performance are effective tools for ensuring the survival and sustainability of MFBs. Therefore, the study recommends that microfinance banks (MFBs) should be more concerned about: The composition of the board of directors and Raising more equity for the stability and sustainability of microfinance institutions

This paper studies the impact of Corporate Governance Mechanisms on the financial performance of listed insurance firms in Nigeria. The Paper investigates whether CEO status, board size and board composition have impact on the financial performance as measured by Return on Asset (ROA) and Return on Equity (ROE). The data used in this study were obtained from annual reports and accounts of selected insurance companies and other statistical documents/records maintained by the Nigerian Exchange Group. Regression analysis was used to estimate the relationship between financial performance measures and the corporate governance mechanisms. The study discovered that there is a positive significant relationship between Board Composition and the two firms’ performance measures (ROE & ROA). The study also shows that the relationship between Board size and ROA was significantly negative, while no relationship exists between board size and Return on Equity (ROE). The result of the relationship between CEO status and ROA was negative while no relationship exists between CEO status and ROE. The study recommends that the code on board composition of listed insurance companies should be sustained and encouraged so that corporate governance could be strengthened to allow room for enhanced financial performance of the listed insurance companies in Nigeria.

The concept of corporate governance has played an important role, especially in the process of submitting financial reports. However, the literature reveals inconsistent findings regarding the impact of corporate governance characteristics on financial performance. Despite numerous studies on corporate governance, there remains a lack of evidence, particularly in the banking industry, specifically concerning foreign exchange banks in Indonesia. This study aims to investigate the influence of board size and audit committee characteristics, namely audit committee size, frequency of audit committee meetings, and audit committee expertise, as integral components of corporate governance, on financial performance. The type of this research is descriptive qualitative research that utilized data obtained from the annual reports published by the Financial Services Authority (OJK) and the websites of 38 foreign exchange banks in Indonesia from 2007 to 2021. The research findings indicate that board size exhibits a non-significant negative relationship with financial performance measured by Return on Assets (ROA) and Return on Equity (ROE). In addition, the results regarding audit committee size and frequency of meetings show no significant relationship with ROA and ROE proxied financial performance. However, audit committee expertise shows a significant negative relationship with financial performance as measured by ROE, and not significant with ROA. These findings will assist management in making informed decisions regarding optimizing board size and audit committee characteristics to meet the needs and interests of all stakeholders within the company. Overall, this research emphasizes the need for continuous improvement in corporate governance practices for sustainable growth and development.

This current study aims to explore the impact of corporate governance on the financial performance of commercial banks in Nepal. Although there were many researches made on the topic “Impact of Corporate Governance on Financial Performance,” However there is only a handful of research found in respect of commercial banks in Nepal. This study tried to fill the gap by studying exclusively in the banking industry of Nepal. The financial performance is measured through Return on assets (ROA) as the dependent variable, and corporate government variables are measured through the percentage of foreign directors in the board, board size, board independence, and board diligence as independent variables. Panel data analysis was used for the study covering the period from 2016/017 to 2020/021 using both descriptive statistic, correlation, multiple regression and t-test to examine the governance practices and their effect in the financial performance of commercial banks in Nepal. The empirical results demonstrated that board diligence (DB) has a positive significant impact on ROA. The result also indicates that there is an insignificant impact of other variables (FD, BI, BS) on ROA of commercial banks in Nepal.

Corporate governance remains a critical determinant of organizational performance in emerging markets, particularly in the banking sector, where transparency and accountability are essential. This study examines how board composition specifically board size and board independence affects financial performance among 38 Indonesian foreign exchange banks from 2017 to 2021. Using panel data regression with fixed effects, validated through Chow and Hausman tests, the study controls for unobserved heterogeneity and firm-specific characteristics. Results show that board size has a statistically significant positive association with both Return on Assets (ROA) and Return on Equity (ROE). From the perspective of Resource Dependence Theory, this relationship may reflect broader access to expertise and external resources associated with larger boards rather than a directly observed improvement in internal decision-making processes. However, board independence does not significantly impact financial outcomes, suggesting that structural independence lacks effectiveness without supporting institutional and cultural frameworks. These findings highlight the need for governance reforms emphasizing functional independence, director training, and stronger enforcement mechanisms to improve oversight. The study contributes to the literature by contextualizing Resource Dependence Theory within Indonesia’s institutional environment and offering insights for tailoring international governance standards to local realities. Overall, the results underscore that governance effectiveness depends not merely on structure but on institutional capacity and cultural adaptation, providing guidance for policymakers and future research.

This research examines the impact of corporate governance on firm performance, as well as it examines the indirect relationship through mediating environmental social responsibility between the corporate governance and firm performance. Panel data regression was performed on a sample of 66 non -financial firms in Egypt during the period from 2010-2018. The model parameters were estimated using generalized least square regression. Six corporate governance indicators (Ownership concentration, Female directorship, Role Duality, Board independence, Board size and Audit reputation) were chosen in testing the hypothesized relationship between corporate governance practices with firm performance, which was measured by return on asset, return on equity and Tobin's q. Moreover, environmental social responsibility factor is measured using the S&P/EGX ESG ratings Published index. The results show that environmental social responsibility partially mediates the relationship between audit reputation, role duality and ownership concentration with return on asset. Moreover, the results show that environmental social responsibility fully mediate the relationship between role duality and return on equity. On the other hand, the results show environmental social responsibility doesn’t mediate the relationship between corporate governance and Tobin's q.

This study delves into the substantial impact of corporate governance practices on a company’s financial performance, focusing specifically on Nepalese commercial banks in the Kathmandu Valley. With 419 participants from all 27 «A» grade commercial banks, the study concentrates on employees currently working in these banks, particularly top-level staff such as managers, department heads, and officers. The primary objective is to investigate the role of corporate governance in driving financial performance, using Return on Assets (ROA) and Return on Equity (ROE) as financial performance indicators of banks. The study explores various factors influencing corporate governance’s impact, including corporate governance policies, disclosure policies, board size, income diversity, and ethnic diversity. Data collection involves primary data from participants associated with the banks, and the analysis is conducted using the Statistical Package for the Social Sciences (SPSS). Descriptive, correlation, and regression analyses are employed to understand the relationship between corporate governance and financial performance variables. Notably, regular evaluations of the board of directors are found to have a beneficial impact on financial performance. A bank’s transparency in sharing performance information exhibits a stronger positive correlation with ROE (R=0.183) compared to ROA (R=0.060), suggesting that ROE is more sensitive to disparities in information availability. Furthermore, the study identifies a negative impact of board size on financial performance, with low-income diversity positively influencing it and board ethnic diversity exerting a negative and statistically significant influence.

The purpose of the present paper is that of researching the relationship between corporate governance and financial performance, on a sample of 51 companies, mainly from the technology area, listed at NASDAQ and component of the Dow Jones index, during the period 2000-2013. The financial performance has been proxied through return on assets (ROA), return on equity (ROE), return on the invested capital (ROIC), and Tobin’s Q ratio (Q). As variables for the corporate governance there have been considered: the characteristics of the board of directors (independence, size, Advisory Committees, and gender diversity); the shareholder structure (the shares of institutional investors and those of CEO); the characteristics of CEO (tenure, age, and duality); the remuneration of CEO (base salary, bonuses, packages with stocks). The estimation techniques used in the empirical analysis have been multivariate regression models based on the method of generalized least squares (GLS), the correction of standard errors for heteroskedasticity using the method of White, and the fixed-effects (FE). The results obtained have highlighted a mixed influence of the corporate governance variables on financial performance (board size, share of women on the boards, the independence of the board), the relationships being influenced also by the perception of the stakeholders. We concluded a positive relationship between ROE and the remuneration of CEO in bonuses, as well as a negative relationship between Tobin’s Q ratio and the remuneration of CEO through stocks at the company they manage. The paper highlights, as novelty, elements from behavioral finance in the economic interpretation of the results, following their explanation also from the human nature perspective.

Many studies have examined the relationship between corporate social responsibility (CSR) and a firm’s financial performance. These investigations have had mixed results. Some studies find a positive relationship, others find a negative relationship, and yet some studies find no significant relationship. This ambiguity highlights the complexity of the relationship between CSR initiatives and firm performance. The present study attempts to better understand this relationship. As such, it has two objectives. Since most of the previous studies have examined a linear relationship between CSR and a company's financial performance, the first objective of this study is to investigate whether there is any nonlinear relationship between CSR and firm’s financial performance. The second objective of this study is to examine the moderating effects of corporate governance factors, especially the board of directors’ characteristics such as board size, board independence, board gender diversity, and CEO duality on the relationship between CSR and a firm’s financial performance. The latter factors have not been fully considered in previous studies as the focus has been on the direct link between CSR and the firm’s financial performance. The study uses panel data from a sample of 82 firms from a large group of publicly traded American firms, which are listed on the U.S. stock exchange and are part of the S&P 500 index covering the years 2012-2021, and a nonlinear panel regression model to estimate the relationship between firm’s financial performance as measured by Return on Asset (ROA) and CSR disclosure index along with a control variable and four Corporate Governance indicators and their interactions with CSR disclosure index. The study finds a non-linear positive relationship between firm’s performance and CSR, suggesting a declining effect of CSR on firm’s performance at higher levels of CSR. It also finds that board gender diversity positively affects the relationship between CSR and a firm’s financial performance. We find no statistically significant interactions between CSR and the Governance indicators of board size, board independence and CEO duality.