FINANCIAL PERFORMANCE AND CORPORATE GOVERNANCE DISCLOSURE IN INDIAN AND NEPALESE COMMERCIAL BANKS

Abstract

Corporate governance brings challenges and opportunities at a time for business organization. It can be the strategic tool to gain competitive financial performance. This study aims to measure the relationship between the Financial Performances and Corporate Governance Disclosure (CGD) of commercial bank of India and Nepal. The study is based on the secondary sources of data that are abstracted from the annual reports and web sites of the respective banks in a sample size of 30 commercial banks that includes 23 Nepalese commercial Banks and 7 Indian commercial Banks. Reference period has been taken from fiscal year 2011/12 to 2015/16. Hence a total of 150 observations have been drawn to analyze the relationship between financial performance and corporate governance. Financial performance is measured by Return on Investment and Corporate Governance is represented by the level of disclosure made in the annual report of commercial banks. Based on the financial and non-financial disclosure, Index has been calculated and corporate governance disclosure index has been defined. Finally, the relationship between corporate governance disclosure index and financial performance is measured and a set of relationship is established. The result shows that financial performance is positively correlated with the corporate governance disclosure. This study provides the empirical observation to policy maker of corporate governance in Indian and Nepalese commercial Banks.