Corporate Governance and Firm Performance in the Financial Sector

Abstract

This study aimed at investigating the relationship between corporate governance and performance of the firms by particularly concentrating on the financial sector of Bangladesh. We have constructed corporate governance index (CGI) for 64 financial institutions listed in Dhaka Stock Exchange (DSE) and related it to the performance of the firms. As a proxy for the measure of performance we had used return on assets (ROA) of the firms. The finding of the study revealed that, corporate governance index (CGI) is quite poor in the financial sector of Bangladesh. Also governance has positive but insignificant relationship with firm performance (return on assets).

Keywords: Corporate governance, firm performance, financial sector, Bangladesh