Browsing by Author "Mastewal Simeneh"

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    The Effect of Corporate Governance on Financial Performance: The Case of Ethiopian Private Commercial Banks and insurances
    (A.A.U, 2024-05-14) Mastewal Simeneh; Dakito Alemu(PhD)
    This study investigates the effect of corporate governance on the financial performance of Ethiopian private commercial banks and insurance companies. Specifically, the study examines how board size, board gender diversity, board member educational qualifications, audit committee size, institutional ownership, and board meeting frequency influence performance, measured by Return on Assets (ROA) and Return on Equity (ROE). The sample consists of 29 private commercial banks and insurance companies purposively, which is 16 were private commercial banks and 13 were private insurances, utilizing balanced panel data from 2019 to 2023 Collected from the bank and insurance companies' audited accounting records and questioners for board secretaries. Descriptive and inferential statistics, including the multiple linear regression approach of the Ordinary Least Square (OLS) model, were employed for analysis. The Random Effect model was selected based on the Hausman test results. Key findings of the regression result indicate that larger board sizes negatively impact financial performance, while gender diversity, higher educational qualifications among board members and Institutional ownership positively related with financial performance. Regular board meetings contribute to better financial performance, but the board size and institutional ownership have insignificant effect on ROE. Although the size of audit committees does not significantly influence on banks and insurances financial performance As a result, the study comes to the conclusion that the financial performance of insurance and bank businesses is not significantly impacted by some corporate governance measures. The conclusions emphasize the importance of optimizing board composition, enhancing gender diversity, and encouraging institutional investment to bolster financial performance in the banking and insurance sectors in Ethiopia. The recommendation include streamlining board sizes, promoting gender diversity, prioritizing board members' educational qualifications, improving audit committee effectiveness, attracting institutional investors, and ensuring regular and strategic board meetings is important for financial performance of banks and insurances.