The impact of corporate governance on firm performance: Empirical evidence from public listed firms in vnindex

Abstract

In this study, we will explore the relationship between financial performance ratios and “corporate governance” attributes, especially the Board of Directors. Specifically, we will examine how ratios such as "Return on Assets" (ROA), and “Return On Equity” (ROE) affect a firm’s corporate governance by testing on data collected over ten years (2014–2023). Key variables include Board of Directors (BOD) size, board independence (IBS), "Return on Assets" (ROA), and “Return On Equity” (ROE). “Ordinary least squares” (OLS) and panel regression models, including “fixed effects” (FE) and “random effects” (RE), were employed to analyze these relationships. Results indicate a quantitatively significant negative relationship between BOD size and ROA but an insignificant relationship with ROE. In contrast, board independence positively correlates with ROA, while its association with ROE remains inconclusive. The findings highlight nuanced impacts of governance structures on firm profitability, providing critical insights for policymakers and stakeholders in improving corporate governance practices.