Corporate governance and financial performance in the emerging economy: The case of Ethiopian insurance companies

Bayelign Abebe Zelalem · Ayalew Ali · Sitotaw Wodajo

37 citations0/0 files storedCogent Economics & Finance

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Insurance and Financial Risk Management Corporate Governance and Financial Management

Abstract

The function of the board in financial institutions differs from that of non-financial institutions because the board of directors’ discretionary power would be limited, particularly in regulated financial systems where financial institutions must operate under legislative and prescriptive procedures, policies, rules, and regulations. As a result, the goal of this research was to look into the effect of corporate governance on the financial performance of Ethiopian insurance companies that are heavily regulated. The study used an explanatory research design with econometric panel data from nine insurance companies from 2012 to 2020. Random effect estimation technique was used to find out the most significant variable. Return on asset and equity were used to measure the financial performance and board size, management soundness, board remuneration, financial disclosure, debt and dividend policy as explanatory variables. The result revealed that board size, management soundness, board remuneration, and financial disclosure have a positive and significant effect on insurance company financial performance, whereas debt and dividend payout have a negative and significant impact on insurance company financial performance. Thus, the study concludes that all corporate governance measures have a significant impact on insurance companies' financial performance in Ethiopia as measured both by return on asset and equity. The study contributes to managers and stakeholders to improve the financial performance. Therefore, directors and other stakeholders should put in place proper governance frameworks to improve financial performance and regulators and policymakers develop policies and regulations to guarantee that businesses adopt proper governance structures in order to improve performance.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 37 citations exist upstream.

References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1933The Modern Corporation and Private Property 2003Corporate Governance and Equity Prices 1997TOWARD A STEWARDSHIP THEORY OF MANAGEMENT 2008Introductory Econometrics for Finance 1956DISTRIBUTION OF INCOMES OF CORPORATIONS AMONG DIVIDENDS, RETAINED EARNINGS AND TAXES 2003Boards of Directors and Firm Performance: Integrating Agency and Resource Dependence Perspectives 2007Boards: Does one size fit all☆

Cited by

2023The Moderating Effect of the COVID-19 Pandemic on the Relation between Corporate Governance and Firm Performance 2023The impact of corporate governance on debt service obligations: evidence from automobile companies listed on the Tokyo stock exchange

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.