“Association between Corporate Governance and Profitability – An empirical Study on some companies in Bangladesh”.

Abstract

Corporate Governance is the set of some factors that provides guidelines to a company how to be directed and controlled. Corporate governance promotes corporate ethics, fairness, accountability and transparency. At present, corporate governance is considered the most important factor for the researcher due to some scandals and corporate collapse of giant company occurred in the past few years in the world. Corporate governance is considered to make the corporate work ethically by following the ethical codes and conducts. The objectives of this study is to analyze the association between corporate governance and profitability. In this project report, I am trying to find the answer of the question – “Are Corporate Governance and Profitability associated?” in the context of Bangladesh. In this report, I have chosen twenty companies of four different industries. I have chosen banking industry, textile industry, food and beverage industry and pharmaceuticals industry. I have focused on some corporate governance tools i.e. Board Size (BS), Board Composition (BC), Board Skill and Competence (BSC), Board Gender Diversity (BGD). The data was evaluated using the Ordinary Least Square multiple regression in a panel data framework using standard descriptive and inferential statistics. I here apply a series of statistical tools i.e. descriptive statistics, variance analysis, multiple regression analysis and significance test. The findings show that board size has positive association with return on equity (ROE) net assets per share at 5 per cent level of significance. Moreover, board composition has negative association with return on equity (ROE), but it has positive relationship with net assets per share. However, board skills and competence has negative association with return on equity (ROE) and also with net assets per share. Though there are mixed result in this study, it can be stated that the empirical result shows that there is a positive association between corporate governance and profitability. Thus organization should implement effective corporate governance practices for the rapid growth and long-term survival in Bangladesh. I hope, findings of this study will not only add value to the organization, required effective corporate governance, in Bangladesh but also add value to the academic literature.