Vol 8 , Issue 2 , July - December 2021 | Pages: 01-27 | Research Paper
Published Online: December 15, 2021
Author Details
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This paper investigates the impact of the level of corporate governance disclosure on bank performance by constructing a corporate governance disclosure index (CGDI) for 8 commercial banks of Nepal. Based on the data published in the banks’ annual reports for 10 years, the composite index construction uses information on four important corporate governance mechanisms, namely board structure, risk management, transparency and disclosure, and audit committee. The results demonstrate that Nepalese banks adhere to 58% of the attributes addressed in the CGDI. The most frequently reported and disclosed elements are audit committees followed by risk management. Regression results provide that the banks with higher levels of corporate governance disclosure are associated with high operating performance measured by return on assets and return on equity. The result indicates that there is a positive correlation of CGDI with ROE however, there is a negative correlation with ROA and Tobin's Q. Likewise, the beta coefficient for CGDI is positive for ROE and ROA whereas it is negative for Tobin's Q.
Keywords
Tobin's-Q; Disclosure price; Social responsibility; Board Structure index; Audit risk; Nepal.