Corporate governance and its impact on firm performance; A study on nepalese development banks

Abstract

Effective corporate governance practices are essential to achieving and maintaining the public trust and confidence in the banking system, as a result they are critical to the proper functioning of the banking sector and economy as a whole. However, little attention has being given to corporate governance of banking sector especially in developing economies. This study examines the corporate governance and its impact on firm performance. There are many dimensions of corporate governance but in this study only six components (transparency, accountability, fairness, discipline, responsibility and perceived firm performance) are considered as the factor of good corporate governance. The objective of this research is to analyze the impact of corporate governance on firm performance of the development banks of Nepal. The study employed a qualitative methodology. Data was collected through a self-administered survey questionnaire. The questionnaire is adopted from a previous validated survey. The target population consists of development banks of Nepal. Simple convenience sampling is used for collection of data from 170 employees. The results indicate a positive relationship between corporate governance and perceived firm performance. The study concludes with some brief prospects that the businesses need to realize the importance of good corporate governance for perceiving success. This paper may benefit for all organization that may be service or manufacturing for realizing the importance of corporate governance on organizational success. Keywords: Corporate Governance, Bank Performance, Nepalese Development Banks, Transparency, Accountability, Fairness. Discipline, Responsibility, Financial Stability, Regression Analysis, Stakeholder Trust, Organizational Efficiency, Risk Management, Employee Morale, Regulatory Compliance