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Meeting legal requirements to maximize profit is no more the sole primary objective of all corporations, now corporate bodies have to think out of the box and put more attention towards social welfare, business ethics and good governance. Today corporations need to be managed and governed as well, that directly relates with corporate performance. In the subject of corporate governance, banks are special because of highly leveraged nature of business that require to “protect” the interest of depositors and to “optimize” the shareholder’s wealth. This study is an attempt to empirically investigate the impact of corporate governance on accounting as well as market performance of banks. To achieve this objective an index based approach is used to measure the corporate governance for each bank where as bank accounting performance is measured by return on assets (ROA), return on equity (ROE) and market performance of each bank is measured by Tobin’s Q. Study include control variables of size, leverage and growth of bank to analyze the sheer impact of corporate governance on performance. This study exclusively used panel data estimation techniques and further Hausman specification test was implied to get consistent results. End results of the study revealed that corporate governance significantly impact the performance of banks however it is worth to note that not all categories of corporate governance influence the performance evenly.
InTraders International Conference on International Trade Conference Book
ICITCB2015
Prof. Dr. Hassan Mobeen Alam
Ammara Sattar