Impact of Corporate Governance Practices on Financial Performance of Listed Companies in Papua New Guinea

Abstract

The main purpose of this research is to examine the impact of corporate governance practices on the financial performance of listed companies in Papua New Guinea from 2018 to 2022. The corporate governance practices are established to monitor and evaluate the conduct of the management of the public listed companies. The Corporate governance charter is established in Papua New Guinea as part of the best practice to assist decision-making on the board of directors. The attributes of corporate governance practices of this study are at the board size, board diversity and the frequency of board meetings. The literature review of the study covers the theoretical framework and research attributes. This study has selected a list of 7 companies out of the twelve companies in Papua New Guinea, where the capital market has very limited growth in the country. A quantitative research approach was employed to conduct this study and using the secondary data for this research. The secondary data were collected from the respective listed companies’ websites and those data are error-free since the financial statements of the listed companies were audited by external auditors. A total of 35 annual reports of the listed company were collected for the research and a convenient sample method is employed for the study. The overall findings of this research have established positive relationships between the board size and the board diversity with the return of equity. The negative relationship was established between board size, board diversity with the return of assets and the Tobin-Q respectively. Furthermore, the negative relationships were identified between the frequency of board meetings with return of assets, equity and the Tobin-Q respectively. The study has indicated that the frequency of board meetings had increased substantially during COVID-19 to mitigate contingency risk. The findings of this study can be used by the regulatory body and listed companies to enhance the effectiveness and efficiency of corporate governance practices so that the overall corporate governance practices could be improved in the future.

Company management decision-making based on the analysis of events after the reporting period

“…Bentley-Goode et al (2017) highlighted the necessity of adjusting financial indicators and providing comprehensive disclosures in the appendixes to financial statements. Sivaruban (2023) and Herda and Lavelle (2014) explored the role of events in corporate risk management after the reporting period. Research has examined how companies can proactively identify, assess, and mitigate risks associated with unforeseen events.…”