Impact of corporate governance on ESG and Financial Performance: A Comparison between Commercial and Islamic Banks
AbstractThe purpose of this study was to determine the impact of corporate governance on ESG disclosure and financial performance of selected commercial and Islamic banks in Bangladesh. The study period selected was from 2015 to 2020, with a sample size of 18 banks. Through an extensive literature review, the author developed two models, which have coinciding variables and are thus comparable in the same study period. By applying correlation and linear regression on two separate models, the study aimed to first find the impact of specific variables (Revenue, Firm size, Board size, Leverage) on ESG. Then the impact of these variables on financial performance is also determined. Using the findings, which showed that ESG has a positive relationship with firm and board size, along with financial performance being positively affected by the board size and firm size, the results are compared and contrasted. The comparison showed that both commercial banks and Islamic banks showed similar findings in terms of what affects ESG disclosure levels and the financial performance of the banks. This study recommends that management pay extra attention to the level of ESG information disclosed, as this can have long-term growth implications.
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