The Effect of Corporate Governance and Sustainability Reporting on Firm Performance: Evidence from Banking Sector in Bangladesh

Abstract

Purpose: This study's principal objective is to investigate and assess how corporate governance and sustainability reporting affect firm performance in Bangladesh's banking sector. Method: This study is conducted on 30 listed banks on the Dhaka Stock Exchange (DSE) from 2018 to 2022. We followed a structured approach here. Firstly, we did a structured review of the available papers on the topic. Then, we collected data from the bank’s financial reports, and this study contains 150 observations. Then, we made two analytical indexes for corporate governance and sustainability reporting, which are mentioned in Appendix A and B. A wide variety of approaches for data analysis were utilized, including correlation matrix, descriptive statistics, and regression analysis. For the validation of the data, we used the Jarque-Bera normality test. Lastly, Tobin’s Q and net income before tax have been used to measure the bank’s performance. Results: The tests that were conducted indicate that corporate governance and firm performance have a significant positive relation with bank performance. The positive relation refers to the importance of a sound corporate governance system with proper accountability, transparency, responsibility, and fairness within the company. Also, sustainability reporting practices enable a company to show its concern about society and the environment, which creates a positive image in the eyes of consumers and shareholders. Ultimately, it affects the company’s profit, which this study’s result proves. Implications: Our study’s findings can motivate the regularity authority to make sustainability reporting and corporate governance mandatory to improve our country's bank performance.