How Corporate Governance Drives Financial Performance: Evidence from the Gulf Banking Sector

Abstract

In recent years, corporate governance has attracted increasing attention, especially in the banking sector, due to its crucial role in improving financial performance, stock market value, and information transparency. This study aims to conceptualize the importance of corporate governance in relation to the financial performance and stock market value of banking institutions in the Gulf region. By analyzing the financial statements of these institutions for the period 2010-2020, the study employed econometric models to assess the relationships between corporate governance, financial performance, and stock market value. The results show a significant positive correlation between the quality of governance and financial performance, which indirectly influences the stock market value of firms. The analysis used linear regression tests and statistical significance tests to establish the coefficients and measure the robustness of the observed relationships. The findings suggest that improving corporate governance could be a key lever to improve bank performance, with implications for banking regulation. Key recommendations include strengthening bank governance regulations, suspending companies that fail to comply with governance standards and providing ongoing training for employees on governance practices and securities regulations.