The Effect of Corporate Governance Mechanisms on Bank Performance Evidence from Saudi Banking Sector (original) (raw)
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Journal of Social Sciences , 2019
Corporate Governance is significant in managing the financial sector particularly banks of both the developing and the developed nations. Major corporate collapses worldwide revealed the presence of weak corporate governance system. The researcher conducted survey from the finance managers of the five commercial Jordanian banks which revealed that good corporate is significant for the performance of the banks. Good corporate governance balances the conflict of interest among the stakeholders. The participants believed that good corporate governance mechanisms such as transparency, privacy, legislations, code of conduct and clarity of procedures can enhance the efficiency of the banks. They believed that good corporate governance mechanisms effects the bank risks such as it protects the shareholders, stakeholders and reduces or transfers risk and ensures the stability of the economy. Hence, good corporate governance is essential for achieving success of the banking sector and in turn for the economic growth. The participants suggested that implementing good corporate governance in the banks leads to the integration of the capital markets, better solutions of the corporate governance issues and helps in building trust, integrity and transparency.
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There is vital role of corporate governance in the establishment of a competitive market; this is also suggested by the empirical studies that nations having good corporate governance practices tend to have strong growth in their corporate sectors. This study examines the impact of corporate governance on the performance of firm. The impact of Board attributes, Audit committee attributes and Ownership attributes was check on Return on Equity and Return on Assets of the Firms. The data related to the study was for Six years from 2009 to 2011 from 9 commercial banks and 9 financial service companies, listed in Karachi Stock Exchange based on convenience sampling. There were total 108 panel observations. Multiple regression (Panel least square) was used to analyze the data.The results show that Board Independence has significant impact on Return on Equity of the firm while Board size and Audit Committee Independence have significant impact on Return on Assets. Keywords:Board size, Audi...
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The purpose of this study is to determine the effect of the implementation of corporate governance mechanisms, namely independent variables consisting of the board of commissioners, managerial ownership, foreign ownership and audit quality. The dependent variable is company performance a control variable, which is company size. The data used in this study are secondary data involving 103 companies listed on the Indonesia Stock Exchange for the period 2015-2018. The data used in this study were analyzed using SPSS Version 25. The results of this study show that: the board of commissioners, Ownership's managerial, foreign ownership, and quality audit only variables that affect the performance ofthe company early while the variable size of the company can not be a variable control of the performance of the company.
Successful Implementation of Corporate Governance Mechanisms in Banks20191028 38306 m804y1
Corporate Governance is significant in managing the financial sector particularly banks of both the developing and the developed nations. Major corporate collapses worldwide revealed the presence of weak corporate governance system. The researcher conducted survey from the finance managers of the five commercial Jordanian banks which revealed that good corporate is significant for the performance of the banks. Good corporate governance balances the conflict of interest among the stakeholders. The participants believed that good corporate governance mechanisms such as transparency, privacy, legislations, code of conduct and clarity of procedures can enhance the efficiency of the banks. They believed that good corporate governance mechanisms effects the bank risks such as it protects the shareholders, stakeholders and reduces or transfers risk and ensures the stability of the economy. Hence, good corporate governance is essential for achieving success of the banking sector and in turn for the economic growth. The participants suggested that implementing good corporate governance in the banks leads to the integration of the capital markets, better solutions of the corporate governance issues and helps in building trust, integrity and transparency.
Corporate Governance Issues and Its Effect on Performance of The Banking Industry of Bangladesh-A Quantitative Study, 2024
This study aims to find out the effect of the corporate governance practice in the banking industries and its effect on the financial performance of the company. The purpose of this study is to find out the unsafe banking companies which should be more concerned about the corporate governance practice. This study has used three regression models for analyzing the data taking 2020-2016 as years of the analysis for the data collection. This study has taken banking companies for analysis. All the 31 listed commercial banks are taken in this study. This study has also used regression analysis for the study and descriptive statistics is used to understand the regularity of the data. This study has used spss for analyzing the data. This study has found out that corporate governance variables have significant effect on the financial performance of the company. specifically, number of independent directors, number of female directors and experience of the independent directors have significant effect on the dependent variables named financial performance. The bigger companies have more profitability than the smaller and new companies. The companies with smaller boards also face different kinds of problem. This study recommends that smaller and new banks of Bangladesh to make their board bigger and take more independent directors and female directors in the board. The independent and female directors should have impact in the board and the female directors should have experience, quality and equity share in the company. The female directors and independent directors have most influence in the profitability of the company among the corporate governance variables taken in this study. This study can be used for the better result from the small and newly listed banks of Bangladesh so that they can understand where to work to get the best result. This study can help the stakeholders of the banks to understand how corporate governance can impact the financial performance of the banks so that they can work accordingly.
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The current research aims to explore the impact of corporate governance on the Saudi banking performance for the period of 2014–2017. Though many researchers tested the relationship of corporate governance and firm performance, globally as well as in Saudi Arabia, however, during the literature review, it was found that many excluded the banking industry. This study tries to fill the gap by looking exclusively at the Saudi banking industry. Firm performance is measured through return on assets, return on equity, and Tobin’s Q as the dependent variables. The corporate governance practices are measured through the board characteristics (size, meeting, number of committees, independence, foreign board membership), and an audit committee (size, meeting, independence) as the independent variables. Firm size and firm age are the controls. Panel data analysis was implemented, using both descriptive and multivariate analysis through multiple regression to investigate the governance practice...
The Economic Impact of Corporate Governance in Saudi Arabia Economy
IOSR Journal of Economics and Finance, 2016
The corporate governance concept has a great importance due to the financial declines and economic crises which several states have witnessed in the money markets and corporations located in a number of states in East Asia, Latin America and Russia during the 1990s of the twentieth century. Furthermore, the US economy has lately witnessed financial and accounting declines and the world financial crisis of 2008-2009 whose one of its most important reasons is related to the lack of transparency and disclosure of the financial and accounting data of a number of corporations and economic units of the money markets. Definitions of corporate governance are varied according to the different adopted viewpoints related to the research scope. Governance can be defined as the corporations' rational governance through a group of laws, rules and bases that guarantee transparency and law enforcement. This Paper aims to identify the various concepts of governance and state the motives behind adopting this new trend while clarifying the main features and objectives of governance, the fundamentals upon which governance is based and the internal and external determinants the control the performance of governance. The study aims as well to review the most important criteria and different principles of governance in light of the institutional framework that organizes its work nature, the international endeavors to activate it. The study aims also to identify the status quo of the corporate governance in Saudi Arabia. The Paper relies on the descriptive method and depends on theoretical library researches and the literature review in this field. Finally, the study introduces its concluded results and recommendations. Research problem: Today, the developing countries are facing a fundamental challenge represented in how to transfer from governance systems based on the relationships basis to governance systems based on laws basis. Some economists still view corporate governance as relatively unimportant in the developing countries due to the limited number of corporations that have current shares. The decline of more economic units has led to wasting the rights of their beneficiaries particularly the current investors and to losing the trust among the awaiting investors in the accounting information included in the reports and financial statements of these units. The corporate governance implementation depends on the cooperation between private and public sectors and the extent to which the legislative authority is strong to enforce the corporation adopting its implementation. Research Objectives: The research aims to identify the various concepts of governance and state the motives behind adopting this new trend while clarifying the main features and objectives of governance, the fundamentals upon which governance is based and the internal and external determinants the control the performance of governance. The study aims as well to review the most important criteria and different principles of governance in light of the institutional framework that organizes its work nature, the international endeavors to activate it.
The Pakistan Development Review, 2010
Governance refers to the way an organisation is directed, administrated or controlled. It includes the set of rules and regulations that affect the manager's decision and contribute to the way company is perceived by the current and potential stakeholders. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as; boards, managers, shareholders and other stakeholders and spells out the rules and procedures and also decision-making assistance on corporate affairs. By doing this, it also provides the structure through which the company's objectives are set and the means of obtaining those objectives and monitoring performance. Corporate governance may be the ways of bringing the interests of investors and managers into line and ensuring that firms are run for the benefit of investors. Effective corporate governance mobilises the capital annexed with the promotion of efficient use of resources both within the company and the larger economy. It also assists in attracting lower cost investment capital by improving domestic as well as international investor's confidence. Good corporate governance ensures the accountability of the management and the Board. The Board of directors will also ensure legal compliance and take impartial decisions for the betterment of the business. It is understood that efficient corporate governance will make it difficult for corrupt practices to develop and take root, though it may not eradicate them immediately. Corporate governance swivel around some important aspects such as Role of board of directors, Basic structure of board of directors, its remuneration, Ownership of director, Availability of freedom to an enterprise, Role of services of institutional directors, Accountability of member of BoD, Financial reporting, Institutionalisation of audit functions and linkage with shareholders. Good corporate governance can add value Ramiz ur Rehman