The Relationship Between Corporate Governance Mechanisms and Financial Institution Performance. A COVID-19 Perspective

Abstract

This article assesses the possibility of a relationship between corporate governance mechanisms and financial institutions performance in an emerging country such as Romania. The sample consists of 30 financial institutions and the data were collected manually from the annual reports. The size of the board, the size of the executive board, the diversity of the gender of the board, the duality of the CEO and the size of the audit committee were chosen as metrics for corporate governance, while ROA and ROE were chosen as metrics for financial performance. The SPSS statistical program was used to run the regression model on the selected sample. We found mixed results. The regression results suggest that board size, executive board members, and CEO duality support hypotheses H1, H2 and H4 and have a positive impact on the firm's performance, both measured by ROA and ROE. Therefore, hypotheses H3 and H5, regarding an association between board gender diversity and audit committee size and financial institution performance, are rejected, having a negative impact during an uncertain time on ROA and ROE. The results contribute to the existing literature and may help the third parties to better understand the correlations between corporate governance mechanisms and the performance of the financial institutions.

Harmonizing Sustainability Disclosure and Financial Performance. An In-depth Exploration within the European Energy Industry and Beyond

“…We identify a negative and significant impact for ROA, whereas for ROE the impact is negative and insignificant. The results are in agreement with Carnini Pulino et al (2022) who also identified a negative impact of ENV scores on financial performance and El Khoury et al (2022) who identify a negative and insignificant impact of environmental score on ROE and Mititean and Sărmaș (2023) who found an insignificant impact of ENV score on ROE. Social performance negatively affects financial performance, Vol.11 (2023) no.4, pp.385-401;DOI 10.2478DOI 10.…”