The effect of corporate governance on financial performance: evidence from a shareholder-oriented system

Document Type : Research Paper


1 University of Sulaimani

2 Near East University


Despite the vast literature, the relationship between corporate governance and firm performance is a hot topic in the research field of corporate finance. This study examines the effect of Corporate Governance (GC) on the performance of firms in non-financial sectors listed on the Frankfort Stock Exchange in Germany over the period 2002-2018. We measure firm performance based on accounting data, using ROA and ROE. The results provide evidence that the characteristics of the audit committee and board of directors have significant and negative effects on firm financial performance, whereas the effect of CEO duality is not statistically significant. Large board size could bring about the issue of deferred decision making by the board members in the insider-controlled CG system of Germany. Furthermore, IFRS adoption in 2005 has a positive effect on firm performance. These results should be having considerable interest on managers and shareholders, precisely when they priorities the financial performance of their companies.


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