Corporate Governance and Its Relationship with Financial Performance in Iraq
DOI:
https://doi.org/10.33032/acr.4099Kulcsszavak:
corporate governance, financial performance, Iraqi listed banksAbsztrakt
It is expected that banks should operate with a recognized standard of corporate governance. The importance of excellent governance processes in banks cannot be overstated because they are essential to gain and maintain the confidence and the customers satisfaction. This paper aims to explore the relationship between corporate governance (CG) and financial performance (FP) of Iraqi listed banks. To obtain this goal, two econometric models were enhanced to measure the association between the variables by applying multiple linear regression. The secondary data was obtained from the audited annual financial statement of ten listed banks in the Iraqi stock exchange in the period 2017-2021. Four corporate governance proxies, such as (CEO Duality, board size, audit committee meetings and independent board) are tested on two indicators of financial performance (return on assets and return on equity). The finding illustrated that CEO Duality, board size, and audit committee meetings have a positive and significant influence on the financial performance of banks. On the other hand, a negative and significant association can be observed between the independent boards and banks’ financial performance. Hence, the study pointed out that the financial performance of banking industry has been impacted by all of the components of corporate governance selected in this research.
Hivatkozások
Abatecola, G. – Caputo, A. – Mari, M. – Poggesi, S. (2012): Relations among Corporate Governance, Codes of Conduct, and the Profitability of Public Utilities: An Empirical Study of Companies on the Italian Stock Exchange. International Journal of Management, 29(2), 611–626. http://www.ucm.es/BUCM/checkip.php?/docview/1020691043?accountid=14514%5Cnhttp://zv4fy5pr5l.search.serialssolutions.com/?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/ProQ:abiglobal&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=artic
Abebe Zelalem, B. – Ali Abebe, A. – Wodajo Bezabih, S. (2022): Corporate governance and financial performance in the emerging economy: The case of Ethiopian insurance companies. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2022.2117117
Alfaraih, M. – Alanezi, F. – Almujamed, H. (2012): The Influence of Institutional and Government Ownership on Firm Performance: Evidence from Kuwait. International Business Research, 5(10). https://doi.org/10.5539/ibr.v5n10p192
Allegrini, M. – Greco, G. (2013): Corporate boards, audit committees and voluntary disclosure: Evidence from Italian Listed Companies. Journal of Management and Governance, 17(1), 187–216. https://doi.org/10.1007/s10997-011-9168-3
Anderson, R. C. – Mansi, S. A. – Reeb, D. M. (2004): Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics, 37(3), 315–342. https://doi.org/10.1016/j.jacceco.2004.01.004
Brown, L. D. – Caylor, M. L. (2006): Corporate governance and firm valuation. Journal of Accounting and Public Policy, 25(4), 409–434. https://doi.org/10.1016/j.jaccpubpol.2006.05.005
Chalevas, C. G. (2011): The Effect of the Mandatory Adoption of Corporate Governance Mechanisms on Executive Compensation. International Journal of Accounting, 46(2), 138–174. https://doi.org/10.1016/j.intacc.2011.04.004
Cho, D. S. – Kim, J. (2007): Outside directors, ownership structure and firm profitability in Korea. Corporate Governance: An International Review, 15(2), 239–250. https://doi.org/10.1111/j.1467-8683.2007.00557.x
Davidson, R. – Goodwin-Stewart, J. – Kent, P. (2005): Internal governance structures and earnings management. Accounting and Finance, 45(2), 241–267. https://doi.org/10.1111/j.1467-629x.2004.00132.x
Davis, J. H. – Schoorman, F. D. – Donaldson, L. (1997): Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.
Ehikioya, B. I. (2009): Corporate governance structure and firm performance in developing economies: Evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9(3), 231–243. https://doi.org/10.1108/14720700910964307
El-Chaarani, H. – Abraham, R. – Skaf, Y. (2022): The Impact of Corporate Governance on the Financial Performance of the Banking Sector in the MENA (Middle Eastern and North African) Region: An Immunity Test of Banks for COVID-19. Journal of Risk and Financial Management, 15(2). https://doi.org/10.3390/jrfm15020082
Falah, W. M. (2017): The Effect of Corporate Governance on the Financial Performance of Listed Companies in Palestine Rxchange (PEX). International Research Journal of Finance and Economics, 7(162), 97–102.
Fama, E. F. – Jensen, M. C. (1983): Separation of Ownership and Control. Journal of Law and Economics, 26(2), 301–325. http://www.journals.uchicago.edu/t-and-c
Finkelstein, S.D’aveni, R. A. (1994): CEO Duality as a Double-Edged Sword: How Boards of Directors Balance Entrenchment Avoidance and Unity of Command. Academy of Management Journal, 37(5), 1079–1108. https://doi.org/10.5465/256667
Goel, P. (2018): Implications of corporate governance on financial performance: an analytical review of governance and social reporting reforms in India. Asian Journal of Sustainability and Social Responsibility, 3(1). https://doi.org/10.1186/s41180-018-0020-4
Jensen, M. C. (1993): The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems. The Journal of Finance, 48(3), 831–880. https://doi.org/10.1111/j.1540-6261.1993.tb04022.x
Karem, L. E. – Bayz, H. A. – Hamad, H. A. – Fatah, N. A. – Ali, D. J. – Ahmed, Z. N. – Gardi, B. – Qader, K. S. (2021): Corporate Governance and Its Effect on Firm Performance in an Emerging Economy. International Journal of Environmental, Sustainability, and Social Sciences, 2(3), 281–291. https://doi.org/10.38142/ijesss.v2i3.96
Kent, P. – Stewart, J. (2008): Corporate governance and disclosures on the transition to International Financial Reporting Standards. Accounting and Finance, 48(4), 649–671. https://doi.org/10.1111/j.1467-629X.2007.00257.x
Klapper, L. F. – Love, I. (2004): Corporate governance, investor protection, and performance in emerging markets. Journal of Corporate Finance, 10(5), 703–728. https://doi.org/10.1016/S0929-1199(03)00046-4
Klein, A. (1998): Firm Performance and Board Committee Structure. Journal of Law and Economics, 14(1), 275–304. https://doi.org/https://doi.org/10.1086/467391
Kolk, A. – Pinkse, J. (2010): The integration of corporate governance in corporate social responsibility disclosures. Corporate Social Responsibility and Environmental Management, 17(1), 15–26. https://doi.org/10.1002/csr.196
Kyere, M. – Ausloos, M. (2021): Corporate governance and firms financial performance in the United Kingdom. International Journal of Finance and Economics, 26(2), 1871–1885. https://doi.org/10.1002/ijfe.1883
Li, B. – Fan, X. – Álvarez-Otero, S. – Sial, M. S. – Ubaldo, C. – Cherian, J. –Vasa, L. (2021): CSR and Workplace Autonomy as Enablers of Workplace Innovation in SMEs through Employees: Extending the Boundary Conditions of Self-Determination Theory. Sustainability 13(11) Paper: 6104. https://doi.org/10.3390/su13116104
Long, F. – Chen, Q. – Xu, L. – Wang, J. – Vasa, L. (2022): Sustainable corporate environmental information disclosure: Evidence for green recovery from polluting firms of China. Fron-tiers in Environmental Science 10 Paper: 1019499 https://doi.org/10.3389/fenvs.2022.1019499
Maier, S. (2005): How global is good corporate governance? London: Ethical Investment Research Services, August, 1–20. http://www.eiris.org/files/researchpublications/howglobalisgoodcorpgov05.pdf
Monks, R.A.G. – Minow, N. (2004): Corporate Governance (Third Edit). Blackwell Publishing.
Muth, M. M. – Donaldson, L. (1998): Stewardship Theory and Board Structure: A contingency approach. Corporate Governance: An International Review, 6(1), 5–28. https://doi.org/10.1111/1467-8683.00076
Okoye, L. – Olokoyo, F. – Okoh, J. – Ezeji, F. – Uzohue, R. (2020): Effect of corporate governance on the financial performance of commercial banks in Nigeria. Banks and Bank Systems, 15(3), 55–69. https://doi.org/10.21511/bbs.15(3).2020.06
Peng, M. W. – Zhang, S. – Li, X. (2007): CEO Duality and Firm Performance during China’s Institutional Transitions. Management and Organization Review, 3(2), 205–225. https://doi.org/10.1111/j.1740-8784.2007.00069.x
Pfeffer, J, – Pfeffer, J. (1972): Size and composition of corporate boards of directors: The organization and its environment. Administrative Science Quarterly, 17(2), 2018–2228. https://doi.org/http://dx.doi.org/10.2307/2393956
Reed, A. M. (2002): Corporate governance reforms in India. Journal of Business Ethics, 37(3), 249–268. https://doi.org/10.1023/A:1015260208546
Shivani, M, V. – Jain, P, K. –Yadav, S, S. (2017): Governance structure and accounting returns: Study of Nifty 500 corporates. Business Analyst, 37(2), 179–194. https://srcc.edu/sites/default/files/Article
Tadesse, S. (2004): The allocation and monitoring role of capital markets: Theory and international evidence. Journal of Financial and Quantitative Analysis, 39(4), 701–730. https://doi.org/10.1017/s0022109000003185
Talab, H. R. – Manaf, K. – Malak, S. S. (2017): Corporate Governance Mechanisms and Firm Performance in Iraq: A Conceptual Framework. Account and Financial Management Journal, 2(11), 1132–1146. https://doi.org/10.18535/afmj/v2i11.15
Ur, K., Cheema, R. – Din, M. S. (2013): Impact of Corporate Governance on Performance of Firms : A Case Study of Cement Industry in Pakistan, 1(4), 44–46. https://doi.org/10.12691/jbms-1-4-1
Yermack, D. (1996): Higher Market Valuation for Firms with a Small Board of Directors. Journal of Financial Economics, 40(40), 185–211.
Letöltések
Megjelent
Folyóirat szám
Rovat
License
Copyright (c) 2023 István Hágen, Amanj Mohamed Ahmed
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
