Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks
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 currentl...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2024-03-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19773/IMFI_2024_01_Dongol.pdf |
| _version_ | 1826906007827120128 |
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| author | Padam Dongol Sajeeb Kumar Shrestha |
| author_facet | Padam Dongol Sajeeb Kumar Shrestha |
| author_sort | Padam Dongol |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-04-24T22:39:01Z |
| format | Article |
| id | doaj.art-4916e74a15d841feb68165fb8f77f756 |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2025-02-17T08:39:52Z |
| publishDate | 2024-03-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-4916e74a15d841feb68165fb8f77f7562025-01-02T21:27:58ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582024-03-0121137338510.21511/imfi.21(1).2024.2819773Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banksPadam Dongol0https://orcid.org/0009-0001-5398-9372Sajeeb Kumar Shrestha1https://orcid.org/0000-0002-5227-771XPh.D. Candidate, Faculty of Business and Accountancy, Management Department, Lincoln University College, MalaysiaPh.D., Associate Professor, Tribhuvan University of Nepal, Nepal; Faculty of Business and Accountancy, Management Department, Lincoln University College, MalaysiaThis 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.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19773/IMFI_2024_01_Dongol.pdfboard sizecorporate governancedisclosure policiesincome diversityreturn on assetsreturn on equity |
| spellingShingle | Padam Dongol Sajeeb Kumar Shrestha Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks Investment Management & Financial Innovations board size corporate governance disclosure policies income diversity return on assets return on equity |
| title | Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks |
| title_full | Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks |
| title_fullStr | Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks |
| title_full_unstemmed | Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks |
| title_short | Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks |
| title_sort | exploring the role of corporate governance in driving financial performance an empirical investigation of nepalese commercial banks |
| topic | board size corporate governance disclosure policies income diversity return on assets return on equity |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19773/IMFI_2024_01_Dongol.pdf |
| work_keys_str_mv | AT padamdongol exploringtheroleofcorporategovernanceindrivingfinancialperformanceanempiricalinvestigationofnepalesecommercialbanks AT sajeebkumarshrestha exploringtheroleofcorporategovernanceindrivingfinancialperformanceanempiricalinvestigationofnepalesecommercialbanks |