The Effect of Corporate Governance on the Financial Performance of Firms (Case of Insurance Companies in Ethiopia)
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Date
2023-11-13
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Publisher
AAU
Abstract
The main objective of the study is to examine the effect of corporate governance on financial
performance of firms (case of insurance companies in Ethiopia). The study employed
explanatory research design and quantitative research approach with an econometric panel data
of 10 sampled insurance companies purposely chosen based on work experience and data
availability that covers the period 2018 to 2022. Board size, board remuneration, debt financing,
firm size, meeting frequency, executives’ compensation and product market competition as
corporate governance variables and return on equity as financial performance measurement
variable. It found that board size, board remuneration and debt financing have positive but
insignificant effect on the performance of insurance companies while firm size and frequency of
board meetings have negative but insignificant effect on the performance of insurance companies
in Ethiopia. Whereas executives’ compensation and product market competition have positive
and significant effect on the performance of insurance companies. Concluded board size, board
remuneration, debt financing, firm size and frequency of board meetings have insignificant
relationship with performance of insurance companies in Ethiopia. However, executives’
compensation and product market competition have positive and significant effect on the
performance of insurance companies.