Impact of Corporate Governance on Financial performance: A Study on DSE listed Insurance Companies in Bangladesh

Abstract

Corporate governance involves promoting the compliance of law in letter & spirit and demonstrating ethical conduct. This study is conducted to examine the impact of corporate governance on the performance of insurance companies. The respective study is conducted to apprehend the relationship between corporate governance mechanisms (board size, board composition, board meetings and board audit committee) and performance of the insurance company. The population for this study defined as listed insurance companies in DSE. The sample comprises of 10 listed insurance companies. Various tests like-Descriptive analysis, multiple linear regression, Pearson correlation and collinearity statistics have been performed using IBM SPSS statistics software. Mainly secondary sources of data are using for the period of 2010 to 2016. This study finds that the corporate governance has an impact on the performance of the insurance sector in Bangladesh. The independent variables of corporate governance (board size, board composition, board meetings and board audit committee) determine 38.20 percent of the performance (ROE) variance. Using Pearson correlation, the results provide evidence of a positive relationship between board sizes and ROE as well as board meetings. The result further reveals that a negative relationship between ROE and board composition. However, the study could not provide any association between performances of the insurance (ROE) and board audit committee.