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.