Rana of variation of governance indicators of state

Rana Al Mosharraf (2015) published his workunder the name of “Relative consequences due to absence of corporate governancein nationalized banks and private commercial banks in Bangladesh. In   this study 3 state owned banks and 3 threeprivate commercial banks had been chosen and only 2013’s data had beencalculated from the annual report of those banks. The study focused on fouraspects of corporate governance namely board size, frequency of board meeting,audit committee composition and audit committee meeting frequency. ROE and ROAwere considered as bank performance. To find out the variability in corporategovernance, coefficient of variation of governance indicators of state ownedbanks and private commercial banks had been calculated. Moreover standarddeviation and standard error had also been calculated for ROA and ROE. Thepaper found that corporate governance does not affect the performance of thebanks.

That paper also tried to show the trend of NPL of both stated ownedbanks and private commercial banks through regression analysis. The resultshows that the trend of NPL in state owned banks are rising much faster thanprivate commercial banks. Anothersignificant issue is relation between corporate governance attributes andvoluntary disclosures in annual reports (Barako Dulacha, Hancock Phil and IzanH: 2006) for companies. Their paper indicates that establishment of an auditcommittee, independence on non-executive directors and separation of the rolesof the CEO and board chair are the key corporate governance issues. Resultsshowed that the proportion of non-executive directors on the board is found tobe significantly negatively associated with the extent of voluntary disclosureon the other hand presence of an audit committee has significant impactassociated with the level of voluntary disclosure. In contrast, boardleadership structure did not appear to have a significant influence on thelevel of voluntary disclosure by companies. Due to the panel nature of theirdata, they use pooled Ordinary Least Square (OLS) with Panel-Corrected StandardErrors (PCSEs).

 2.1Corporate governance and bank performanceCorporategovernance of banks has crucial importance as banks hold an overwhelminglydominant position in the financial systems for emerging economies likeBangladesh. Hasnan Ahmed (2009)published his work under the name of “An Examination of the Relationship ofGovernance Structure and Performance: Evidence from Banking Companies inBangladesh.” In his work he included 25 listed banks in Dhaka Stock Exchange.Data used for the work is 5 years (2003-2008). He applied regression for hisresearch. He had taken ROA and ROE as dependent variables and board size, shareof independent directors, share of non-independent non-executive director,ownership of directors, institutional ownership, general public ownership, CEOremuneration, the number of audit committee meetings, leverage and company sizeas independent variables. Result of the study shows that board composition hasno relationship with performance.

Audit committee was found to have significantrelationship with accounting principles. Director’s ownership and institutionalownership found to have negative relationship.Therelationship between bank performance and corporate governance components inNigeria was investigated by the UwuigbeOlubukunola Ranti (2011).

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The study took 3 years data and 21 banks out of24 listed banks for study. The study presumed return on capital employed,earnings per share, return on assets and return on equity as bank performance.Board size, board composition, size of the bank and debt structure of bank weretaken as corporate governance components. Regression analysis of the studyshowed that the return on equity and return on asset went down as board sizeincreased. Again the return on equity and return on asset decreased when moreoutside directors are introduced to the board.

The result also expressed thatthe more governance issues disclosed, the higher the ROA and ROE. Onthe other hand Zyad M. S. Marashdeh(2014) examined the effect of corporate governance on firm performance inJordan. 10 years data had been collected from the annual reports in this case 131listed companies were included in the study to show the effect of corporategovernance.

The study took ROA an ROE as dependent variables and total asset,leverage ratio, age of the firm and liquidity ratio as independent variables.In this study asset and leverage had been found to have significant effect onfirm performance and age of the firm and liquidity had insignificant effect onfirm performance. Mohammad Ziaul Hoque,Md. Rabiul Islam and Hasnan Ahmed (2012) examined in their paper the effectof corporate governance and performance of listed banks in Bangladesh. In theirstudy they included 25 banking companies in Bangladesh and data used2003-2012.  In the study OLS method wasused for regression. Dependent variables were included as ROE and ROA.Independent variables comprised of number of board members, proportion ofindependent director, director ownership, institutional ownership, generalpublic ownership, number of audit committee meetings, Chief Executive Officer’scompensation.

Two control variables were used in the form of company size anddebt to equity size. Estimated results demonstrate that the general publicownership and the frequencies of audit committee meetings are positivelyassociated with ROA, ROE. CEO’s remuneration has been found to be negative withbank performance.Kyereboah-Coleman and Biekpe (2006) investigated theimpact of corporate governance on firm. They had taken 18 banks of Ghana assample. For this purpose 8 years data (1997-2004) had been collected. Size ofthe firm, debt, board composition, board size, tenure of CEO were taken intoindependent variables and they are tested against ROA and ROE. Positiverelationship had been found with firm size, debt and board size.

Negative relationshiphad been found with board composition and tenure of CEO. Ashenafi Beyene Fanta, Kelifa Srmolo Kemal andYodit Kassa Waka (2013) conducted a study on corporate governance and bankperformance in Ethiopia. In the study they used data from 2005 to 2011. Theyselected nine commercial banks as their samples and among which two were stateowned banks. Multiple linear regression was used to show the analysis.

In thestudy ROE and ROA were taken a