Abstract
Purpose – This study examines the relationship between corporate governance and the financial performance of Nepalese commercial banks.
Design/methodology/approach – The study takes into account board-related characteristics of corporate governance namely board size, board independence, board gender diversity, and board committee and their link with financial performance measured in terms of Return on equity. This study used 10 years of data which was collected from the published annual reports of the respective banks. This study employs a judgmental sampling technique to select 10 commercial banks. Both descriptive and inferential statistics were used to test hypotheses with the help of STATA.
Findings – The results show a positive and significant relationship between board gender diversity and financial performance. The relationship between board independence has a positive and weak relationship with financial performance. Conversely, the results show a significant and negative relationship between board size and financial performance. Additionally, results show no statistical evidence for the relationship between board committees and financial performance.
Research limitations/implications – Focusing solely on board-related characteristics of corporate governance narrows the scope. This study sample covers only 10 listed commercial banks and data is derived from 10 years. The findings contribute to corporate governance literature and reform corporate governance practices, especially in the context of Nepal and similar emerging economies.
Originality/Value-This study provides new insights into the relationship between board-related corporate governance and the financial performance of Nepalese commercial banks and similar economies.