The influence of corporate governance structure on the performance of the listed multinational organizations in Bangladesh
Abstract
Corporate Governance practices are yet to absorb effectively by most of the business organizations
in Bangladesh. However, companies gradually begin to incorporate the “good” government culture
after strict BSEC intervention in the past several years and the overall scenario are indeed
improving. Multinational Organizations really picked up the pace in practicing good governance
cultures because of the both global and local demanding environment, whereas the local firms are
lagging behind incorporating these factors in their business environment. Being listed on stock
exchanges, the requirement to maintain good governance became mandatory for the organizations
protecting shareholder rights. To examine the present scenario of corporate governance in
Bangladesh, financial data of ten listed multinational organizations from the current five years of
audited annual reports were collected and ran into regression analysis. Since these organizations
were really doing good on profit margin, profitability variables like ROA and ROE were
considered as dependent variables for the multivariable regression. Explanatory corporate
governance factors like independent directors on executive boards, expert audit committee
members and government ownership showed positive relationship with firm performance. On the
contrary, explanatory factors like board size, insider ownership and institutional ownership failed
to provide any evidence for any relationship with firm performance. In order to further improve
the “good” governance practices, local firms will also need to step up along with the MNCs to
create a revolutionary change in the perception of businesses of Bangladesh in the global arena.