Abstract
The study aimed to explore the relationship between corporate governance (i.e., tasks and responsibilities of the Board of Directors, disclosure and transparency, shareholders’ rights and fair treatment of shareholders, and audit and internal control) and bank performance. Data were collected using a questionnaire distributed to a sample consisting of managers of commercial banks in the northern region in Jordan. The study found a significant and positive relationship between corporate governance and bank performance. Particularly, the study pointed out two principles (i.e., tasks and responsibilities of the Board of Directors, and audit and internal control) were positively related to bank performance, while there were no significant relationships between the other two principles (i.e., disclosure and transparency as well as shareholders’ rights and fair treatment of shareholders). It was concluded that corporate governance is very critical for enhancing bank performance. Additionally, commercial banks should pay more attention to all principles of corporate governance.
Highlights
Corporate governance gained a specific importance from both academics and practitioners due to numerous reasons
The results indicated that audit and internal control had a significant relationship with bank performance (β = 0.225, t = 2.752, Sig. = 0.017)
In agreement with some previous studies (e.g., Othman, Al-Matarna, 2016; Al-Sartawi, 2015; Al-Najjar and Akl, 2016), the current study found that corporate governance had a significant relationship with bank performance
Summary
Corporate governance gained a specific importance from both academics and practitioners due to numerous reasons. According to Warrad and Khaddam (2020), good corporate governance helps the Board of Directors along with managers achieve corporate goals following effective exploitation of resources and monitoring processes. Banking challenges such as the financial crisis of 2008 called policymakers in different industries, banking, to adopt some mechanisms like corporate governance to adjust corporate behaviors (Bhagat & Bolton, 2019). According to some previous studies (e.g., Othman & Al-Matarna, 2016; Al-Najjar and Akl, 2016; Bhagat & Bolton, 2019; Buallay, Hamdan and Zureigat, 2017), corporate governance plays an important role in enhancing corporate performance. To explore the relationships between the variables of corporate governance and bank performance
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