IMPACT OF CORPORATE GOVERNANCE ON FIRM PERFORMANCE: THE MODERATING ROLE OF CAPITAL STRUCTURE

Abstract

Corporate governance refers to the collaborative process involving top management, the board of directors, and shareholders in determining a company's performance and strategic direction. It also examines how the goals guiding the corporation's governance interact with its stakeholders. The primary aim of this study is to identify the characteristics that best represent corporate governance and its relationship with banking performance, specifically focusing on Nepalese commercial banks. The study employs a descriptive, causal-comparative research design to explore the relationship between various factors and their influences. This survey encompasses 20 commercial banks, from which ten have been selected for the study. The findings indicate that board size, earnings per share, and the presence of female directors negatively influence ROA and NIM. While the effects of earnings per share and the number of female directors are statistically insignificant, board size has a statistically significant impact. Conversely, the capital adequacy ratio and ethnic group positively affect ROA and NIM, with the capital adequacy ratio showing a statistically significant relationship with performance. The ethnic group also plays a crucial role. Consequently, the variables that demonstrate a linear relationship with ROA and NIM include board size, earnings per share, ethnic group, capital adequacy ratio, and the number of female directors.