Abstract:
Now a day’s issue of corporate governance is becoming the popular agenda and getting attentions of
our world as a general due to essentiality of corporate governance structure on firm’s financial
performance. The essence in corporate governance mechanisms is to vigorously demise agency costs
in order to ensure that firm’s capital is allocated and deployed only on profitable activities. It plays a
key role in deterrence of agency problems which would be created between managers and
shareholders. The work of scholars confirms that, firms with pertinent corporate governance structure
are firm with appreciative financial performance than firms with flaw corporate governance. To reach
on an authentic finding from the study, we used return on asset, return on equity and operating profit
margin as dependent variables; board size, board independence, frequency of board meetings, audit
committee and board ownership as independent, and financial leverage and firm growth rate were
used as control variables.
The researchers used both correlation analysis and pooled panel time series data with cross-sectional
nature. The econometric regression result shows that, board size is negatively and significantly
associated to all the three indicators of financial performance: return on asset return on equity and
operating profit margin. Both Board independence and Board ownership have positive relationships
and significant effects on the three indicators of commercial banks financial performance. The result
shows that Audit committee negatively and significantly correlated to return on asset and return on
equity with negative and insignificant impact on operating profit margin. Frequency of board meeting
remains positive in terms of its direction of connection and immaterial in its affiliation with the three
financial performance indicators of commercial banks under investigation.
