Corporate governance and its impact on firm performance and investor confidence

Abstract

This study investigates the impact of corporate governance (CG) on firm performance and investor confidence in Nepal‟s banking sector, utilizing primary data from 400 respondents across three major commercial banks (HBL, NABIL, NIMB). The findings reveal that corporate governance is significantly influenced by organizational performance, financial performance, investor confidence, and organizational culture. Correlation analysis showed strong positive and statistically significant relationships between corporate governance and organizational performance (r = 0.762), financial performance (r = 0.715), investor confidence (r = 0.683), and organizational culture (r = 0.697). Regression analysis demonstrated that organizational performance (β = 0.378, p < 0.001) and financial performance (β = 0.261, p < 0.001) were the strongest predictors of corporate governance, followed by organizational culture (β = 0.207, p < 0.001) and investor confidence (β = 0.183, p < 0.001). The model explained 67.4% of the variance in corporate governance (R² = 0.674). These results highlight that strengthening organizational performance and financial performance has a greater impact on governance outcomes than other factors. The study provides valuable insights for policymakers, bank managers, and regulators aiming to enhance corporate governance frameworks to support firm performance, investor confidence, and financial stability in Nepal‟s banking industry. Keywords: Corporate governance, firm performance, investor confidence, organizational culture, banking sector, Nepal. .