Abstract

This study aims at determining the factors of corporate governance that impact financial performance. It uses a panel analysis approach that considers data from 2004 to 2018 of the insurance companies in Muscat, Oman. Out of the 10 insurance companies listed in Muscat Securities Market, four companies were chosen based on pre-established criteria considering the availability of data for the period indicated. To analyze the data gathered, descriptive analysis techniques using SPSS version 21 and Stata version 14 were applied. Based on the findings, board size affects ROA positively but negatively on ROE; FBM affects ROE positively but negatively affects ROA; BI has a negative influence on both ROA and ROE; and, AC affects ROA positively but negatively on ROE.

Conversely, audit committee size positively impacts ROA and the independence and impartiality is a must to be a member of the audit committee. Conclusion from the findings suggests that the increasing number of the members of audit committee contributes positive signs for ROA which can be supported by many studies. Findings proved the significant positive relationship between audit committee size and independence on a firm’s financial performance. For organizations such as insurance companies, the frequency of board meetings can be determining factor to decide in terms of profitability issues and business performance. Finally, the results provide the management to examine the implications of deciding how many members of the board, frequency of board meetings, board independence, and audit committee as these can influence financial performance such as ROA and ROE.

Keywords

  • Non-specific neck Pain
  • Myofascial Trigger Point
  • Prevalence
  • Active
  • Latent
  • Sri Lanka

References

  1. Abbott, L.J., S.P., K.R., & Gary, F.P. (2003). The Association between Audit Committee Characteristics and Audit Fees. Auditing a Journal of Practice & Theory, 22(2), 17-32.
  2. Adams, M. D., et al. (2000). The genome sequence of Drosophila melanogaster. Science, 287(5461), 2185-2195.
  3. Adetunji. B., & Olawoye, O. (2009). The effects of internal and external mechanism on governance in Nigeria. Corporate Ownership & Control, 7(2), 330-344.
  4. Adeusi, S.O., Akeke, N.I., & Aribaba, F.O. (2013). Corporate governance and firm financial performance: Do ownership and board size matter? Academic Journal of Interdisciplinary Studies, 2(3), 77-91.
  5. Adigwe, P. K., Nwanna, I. O., & John, E. I. (2016). Effect of corporate governance mechanism on the financial performance of banks in Nigeria. NG-Journal of Social Development, 5(2), 41-50.
  6. Almajali, A.Y., Alamro, S.A. & Al-Soub, Y.Z. (2012). Factors Affecting the Financial Performance of Jordanian Insurance Companies Listed at Amman Stock Exchange, Journal of Management Research, 4(2), 266-289.
  7. Anthony, K. (2007). Corporate governance and firm performance in Africa: Dynamic panel data Analysis. Istanbul, turkey: Sabanci University.
  8. Baltagi, B., & Li, D. (2006). Prediction in the Panel Data Model with Spatial Correlation: the Case of Liquor, Spatial Economic Analysis, 1(2), 175-185.
  9. Brown, T.A. (2006). Confirmatory factor analysis for applied research. New York: Guilford
  10. Bryman, A., & Bell, E. (2007). The Ethics of Management Research: An Exploratory Content Analysis. Oxford: Oxford University Press.
  11. Cadbury, A. (2002). Corporate Governance and Chairmanship: A Personal View. USA: Oxford University Press.
  12. Cavana, R. Y., Delahaye, B. L., & Sekaran, U. (2001). Applied business research: Qualitative and quantitative methods. Milton, Australia: John Wiley & Sons.
  13. CIPE. (1990). Global Programs, Democratic Governance. How Good Governance Got a Bad Name – and Why Governance Still Matters. Retrieved March 3, 2020, from:https://www.cipe.org/resources/good-governance-got-bad-name-governance-still-matters/
  14. Capital Market Authority. (2019). Annual report, 2004-2018. Retrieved February 27, 2020, from: https://www.cma.gov.om/Home/AnnualReportFileDownlad/6
  15. Cohen, S. G., Chang, L., and Ledford, G. E., Jr. (1997). A hierarchical construct of self-management leadership and its relationship to quality of work life and perceived work group effectiveness. Personnel Psychology, 50(2): 275-308.
  16. Corporate Finance Institute Education Inc. (2015). What is Return on Equity (ROE)?Retrieved March 11, 2020, from:https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-return-on-equity-roe/.
  17. Dallas, G. (2004). Governance and Risk: An Analytical Handbook for Investors, Managers, Directors, & Stakeholders. US: McGraw-Hill Inc.
  18. Dar, L. A., Naseem, M. A., Rehman, R. U., & Niazi, D. G. (2011). Corporate Governance and Firm Performance a Case Study of Pakistan Oil and Gas Companies Listed in Karachi Stock Exchange. Global Journal of Management and Business Research, 11 (8), 1-10.
  19. Deakin, S. (2005). The coming transformation of shareholder value. Corporate Governance: An International Review, 13(1), 11–18.
  20. DeFond, M., Hann, R., & Hu, X. (2005). Does the Market Value Financial Expertise on Audit Committees of Boards of Directors. Journal of Accounting Research, 43(2), 153-193.
  21. Doddamadanayak, R., Prabhakar, K., & Prabhakaran, C. (2011). Impact of Corruption on Corporate Governance - An Overview Under the Context of Policy Framework Against Corporate Corruption. Retrieved March 2, 2020, from: https://ssrn.com/abstract=1937733
  22. Dwivedi, N., & Jain, A.K. (2005). Corporate governance and performance of Indian firms: the effect of board size and ownership. Employee Responsibilities and Rights Journal, 17(3), 161-172.
  23. Easterby-Smith, M., Thorpe, R., & Jackson, P. (2008b). Management Research. London: SAGE.
  24. Eluyela, D. F., Akintimehin, O. O., Okere, W., Ozordi, E., Osuma, G. O., Ilogho, S. O., & Oladipo, O. A. (2018). Board meeting frequency and firm performance Examining the nexus in Nigerian deposit money banks. Heliyon, 4(10), 1-14. https://doi.org/10.1016/j.heli-yon.2018.e00850
  25. Fama, E., & Jensen, M. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26(1), 301-325.
  26. Fung, B. (2014). The Demand and Need for Transparency and Disclosure in Corporate Governance. Universal Journal of Management, 2(2), 72-80. DOI: 10.13189/ujm.2014.020203.
  27. Funmi, B. (2014). Code of Corporate Governance for the Insurance Industry, Insurance and you. RetrievedMay 1, 2020, from: https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/centre-for-corporate-governance/code-of-good-corporate-governance-for-the-insurance-industry-in-nigeria.pdf
  28. Georgiou, J. (2010). Verification of a building defect classification system for housing. Structural Survey, 28(5), 370-383.
  29. Green, S. (2005). Sarbanes-Oxley and the Board of Directors: Techniques and Best Practices for Corporate Governance. New Jersey: John Wiley and Sons, Inc.
  30. Hafiza A., Hashim, I., & Susela S.D. (2008). Board Independence, CEO Duality and Accrual Management: Malaysian Evidence. Asian Journal of Business and Accounting, 1(1), 27-46.
  31. Hair, J.F., Black, W.C., Babin, B.J., & Anderson, R.E. (2010). Multivariate Data Analysis. 7th Edition. Upper Saddle River, New Jersey: Prentice Hall.
  32. Hermalin, B. E., & Weisbach, M. S. (2003). Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature. Federal Reserve Bank of New York Economic Policy Review, 9(1), 7–26.
  33. Isik, O., & Ince, A. R. (2016). Board size, board composition and performance: An investigation on Turkish banks. International Business Research, 9(2), 74-84. https://doi.org/10.5539/ibr.v9n2p74
  34. Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831-880.
  35. Kajola, S. O. (2008). Corporate Governance and Firm Performance: the Case of Nigerian Listed Firm. Retrieved May 2, 2020, from: http://www.sciepub.com/reference/221156.
  36. Karamanou, I., & Vafeas, N. (2005). The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis. Journal of Accounting Research, 43, 453-486
  37. Kim, J., et al. (2008). Chemosensitization prevents tolerance of Aspergillus fumigatus to antimycotic drugs. Biochem Biophys Res Commun, 372(1):266-71
  38. Kline, R. B. (2005). Principles and Practice of Structural Equation Modeling. 2nd Edition. New York: Guilford.
  39. Lamichhane, P. (2018). Corporate Governance and Financial Performance in Nepal. NCC Journal, 3(1), 108–120. https://doi.org/10.3126/nccj.v3i1.20253
  40. Lindo, D.K. (2008). Asset Management is Your Job. SuperVision, 69(1), 14-18.
  41. Logan, D., Roy, D., & Regelbrugge, L. (1997). Global Corporate Citizenship – Rationale and Strategies. New York: The Hitachi Foundation.
  42. Lorne, F.T., & Dilling, P. (2012). Creating Values for Sustainability: Stakeholders Engagement, Incentive Alignment, and Value Currency. Economics Research International, 2012(1), 1-9.
  43. Mugenda, O. M. & Mugenda, A. G. (2003). Research methods: Quantitative and qualitative Approaches. Nairobi: Acts Press
  44. Mak, Y., & Kusnadi, Y. (2005). Size really matters: further evidence on the negative relationship between board size and firm value. Pacific- Basin Finance Journal, 13(1), 301- 318.
  45. Marsigalia, B., Giovannini, R., & Palumbo, E. (2019). Corporate Governance and Firm Value: An Empirical Investigation of The Wine Companies. Corporate Governance: Search for the Advanced Practices.
  46. Mohan, A., & Chandramohan, S. (2018). Impact of Corporate Governance on Firm Performance: Empirical Evidence from India (March 3, 2018). IMPACT: International Journal of Research in Humanities, Arts and Literature, 6(2), 209-218.
  47. Monteiro, A. (2006). A quick guide to financial ratios: education. Personal Finance, 2006(307), 8-10.
  48. Musa, B., Abdulrasheed, A., & Umar, H. (2020). Effect of board size and ownership structure on deposit money banks financial performance in Nigeria. Management and Social Sciences (GOJAMSS), 18(January 2020), 79-90.
  49. Muscat Securities Market. (2019). Annual reports, 2004-2018. Retrieved on October 18, 2020, from: https://www.cma.gov.om/Home/AnnualReportFileDownlad/11.
  50. Muth, M., & Donaldson, L. (1998) Stewardship Theory and Board Structure: A Contingency Approach. Corporate Governance, 6(1), 2-28.
  51. Nguyen, T. H., & Nguyen, H. A. (2020). The Impact of Capital Structure on Firm Performance: Evidence from Vietnam. Journal of Asian Finance, Economics and Business, 7(4), 97-105. https://doi.org/10.13106/jafeb.2020.vol7.no4.97
  52. Ojeka, S. A., Iyoha, F. O., Ikpefan, O. A., & Osakwe, C. (2017). Does reformed code of corporate governance 2011enhance the market performance of the firms in Nigeria? International Journal of Economic Performance, 11(1), 155-164.
  53. Organization for Economic Cooperation and Development. (2004). Software: 1987-1996, Acrobat is a trademark of ADOBE. Retrieved January 31, 2020, from:https://www.oecd.org/daf/ca/oecd-principles-corporate-governance-2004.htm
  54. Pallant, J. (2010). SPSS Survival Manual. 4th Edition. New York: McGraw-Hill.
  55. Rappaport, A. (1986). Creating Shareholder Value: The New Standard for Business Performance. New York: The Free Press.
  56. Roman, A. (2014). The Three Pillars of Corporate Governance. Retrieved February 2, 2020, from: https://www.azeusconvene.com/articles/three-pillars-of-corporate-governance
  57. Silwal, P.P. (2016). Effects of Corporate Governance on the performance of Nepalese Firms. The International Research Journal of Management Science, 1 (1), 42-59.
  58. Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2,500 Danish firms. International Journal of Productivity and Performance Management 55 (7), 569–593.
  59. Stock, J.H., & Watson, M.W. (2007). Introduction to Econometrics. (2nd Ed.). Boston: Addison Wesley.
  60. Stoeberl, P. A., & Sherony, B.C. (1985). Board efficiency and effectiveness. In E. Mattar and M. Ball (eds.) Handbook for Corporate Directors. New York: McGraw-Hill.
  61. Tabachnick, B. G., & Fidell, L. S. (2007). Using Multivariate Statistics. 5th Edition. Upper Saddle River, NJ: Pearson Allyn and Bacon
  62. Ubhar Capital (SAOC). (2017). Arabian Falcon IPO Prospectus_English.pdf, 2017. Retrieved October 23, 2019, from:
  63. https://www.u-capital.net/pdf/Arabian%20Falcon%20IPO%20Prospectus_English.pdf
  64. Uma,S. (2003). Research Methods for Business: A Skill Building Approach. 4th Edition. USA: John Wiley & Sons, Inc.
  65. Vafeas, N. (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1), 113-142.
  66. Yasser, Q. R. (2011a). Corporate Governance and Performance (A Case Study for Pakistani Communication Sector). International Journal of Trade, Economics and Finance, 2 (3), 204-211.
  67. Yermack, D. (1996). Higher market valuation of companies with a small board of directors, Journal of Financial Economics, 40(2), 185-211