THE INTERACTION BETWEEN CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE: AN IMPLEMENTATION FOR THE UK BANKS

Abstract

Purpose- The purpose of this study is to examine the relationship between the performance of commercial banks with corporate governance elements. Thus, the listed commercial banks in the London Stock Exchange (LSE) of the UK will be considered in this study. Hence, using availability data of the Financial Times Stock Exchange 100 (FTSE 100) companies including banks that operate in LSE, the period (2010-2019). Methodology- The study employs a sample of 10 biggest banks trading on (LSE) ranked by market capitalization as of December 31st. 2019. The study will use panel data method and the results will be analysed by descriptive statistics, correlation, and regression. Seven major corporate governance variables will be analysed within the framework of corporate governance theory namely: Board Size, Board Independent, Foreign owners, bank ownership structure, Audit Committee, Female Board, Financial Leverage, and board size and their impact on the financial performance of the commercial bank in the UK which will be measured using Return on Assets Ratio (ROA), Return on Equity (ROE), and The TOBIN’s Q. Finding- The analysis of previous studies reveals that internal corporate governance mechanism (Board of Director's) has significant impact on the performance of banks such as Tamer Shahwan (2014). Conclusion- This study will investigate the relationship between CG (Board Characteristics, Audit committee, Owners structure, and banks size and financial leverage) and banks performance which will measured by (ROA, ROE, and TOBIN; Q).

Keywords

• Corporate governance
• board of directors’ characteristics
• audit committee characteristics
• ownership structure
• bank performance

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