Abstract:
Recent years become critical for leaders as well as for regulatory bodies due to collapse
of corporate across the world. As a result of failure of multiple organization corporate
governance become focal point. Corporate governance determines the way by which
organizations and family owned businesses are direct and control. Corporate governance
code guides the organization to behave in such a way that will beneficial for society as
well as for organization itself. Corporate governance depict the relationship between the
individuals and groups such as creditors, sub-contractors, suppliers, shareholders and
employees that supply the fund to enhance the performance of organization. Many
researchers argue that adopting CG code reduces the risk of firm and enhances the value
of shareholders. The purpose of this study was to determine the impact of corporate
governance on financial performance of banks. The precise goal of this research was to
determine the relationship between board size and financial performance, relationship
between leadership and financial performance, relationship between audit committee and
financial performance, relationship between transparency and financial performance. The
study was descriptive in nature and focus on the banks that were operational from 2008 to
2009. Financial statements were used to analyze the financial performance of the firms
with the help of statistical software known as SPSS. Profitability ratios used in this
research to measure the financial performance of the banks are Return on Equity and
Return on Assets. This study confirms the significant relationship between corporate
governance variables and financial performance of the banks. This research recommends
that board of directors have to develop road map for transparency of CG practices in
banking industry of Pakistan.Further organization has to invest in CG practices and
corporate social responsibility to improve the image of the banks in the perception of
customers. Leaders must articulate vision properly so management have understanding
what organization do and what types of goals needed to pursued for the prosperity of
organization.
