Abstract
This study aims to analyze the relationships between corporate governance instruments on the wealth of financial intermediaries in wide-ranging. The data employed in this study are secondary data from nine (9) commercial banks and covered the years 2013-2020. The approach used in data processing is a 2SLS estimation and multilevel mixed-effects for the dependent variable natural logarithm of total assets. The results provided by the econometric analysis show that board size, sovereign committees, Net Interest Margin (NIM), Non-Performing Loans (NPL’s), and equity to liabilities have an important impact on the protection of the assets of financial institutions. While surprising results have been generated in the composition of the board structure in terms of gender diversity, they have turned out to be insignificant. The originality and value of this study lie in the approach of including the characteristics of the board, as well as the combination of some financial indicators different from previous studies, which makes more comprehensive the study of the impact of board composition on increasing the wealth of banks.
Highlights
A large number of businesses around the world at the beginning of the XXI century have encountered difficulties and are on the threshold of collapse, as a result of rapid change and the impact of the Covid-19 pandemic
The results provided by the econometric analysis show that board size, sovereign committees, Net Interest Margin (NIM), Non-Performing Loans (NPL‟s), and equity to liabilities have an important impact on the protection of the assets of financial institutions
This study examined the association of corporate governance, some of the crucial financial indicators (NIM, NPL's, ELR, log board size, log male composition, log female composition, and log subcommittees), and the protection of shareholders value
Summary
A large number of businesses around the world at the beginning of the XXI century have encountered difficulties and are on the threshold of collapse, as a result of rapid change and the impact of the Covid-19 pandemic. In many studies, it has been reported that the non-implementation of corporate governance mechanisms has affected non-financial businesses but Published online by the Institute for Research and European Studies at www.e-jlia.com financial ones, respectively banks. Banks, have a significant impact on intermediation between different stakeholders, which has a direct impact on economic growth. When we are discussing between two stakeholders, businesses on the one hand and the financial industry on the other, there are arguments and counter-arguments regarding asymmetry information. To eliminate this concern, many studies have been conducted on information asymmetry, which directly affects the components of corporate governance. Craig et al (2007) documented that the importance of corporate governance initially attracted the attention of the US authorities due to accounting scandals in firms Enron and WorldCom, etc., further arguing that the weak corporate governance system creates gaps for conflict of interest concerning the evaluation process
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