The also said that the conflict of interest

The prime
purpose of corporate governance is to make sure that the firm’s operation is
parallel to shareholders’ interest. A lot of
researchers have worked on Corporate Governance and Firm’s Performance relationship
with different dependent and independent variables. Majority of these studies
support the relationship between corporate governance and financial performance
of the companies. Though some of the studies doesn’t agree with the
relationship of   corporate
governance and financial performance of the companies.


Mr. Rouf
(2012) has made his research on some Bangladeshi companies. On his study, he found
a positive relationship between corporate governance and the performance of
these companies. He a statement that a quality practice of corporate governance
makes sure transparency and it removes errors in the firm’s financial statement.
This may act as a media of getting trust among shareholders regarding the
performance of the companies.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now


Barkema and Gomez-Mejia (1998) intended to
find some key characters of corporate governance through a research. As the
major characters of corporate governance they found board composition,
expertness of the members of the board and whether board member is the chairman
of the company etc. They emphasize on the fact that an effective corporate
governance should include ownership, directors and upper management, audit team
and the director’s considerations for the corporate control.


Fama and Jensen (1983) have
researched on corporate governance. On the paper, they made a
statement that a good corporate governance is possible to establish with the
help of efficient market. But the efficient market should be replaced by
takeover or any other means. In terms of Bangladesh it is not a true fact.
There is no conditional rule for merger & acquisition in our country Bangladesh.
Still in the listed companies, we haven’t seen that
much of a merger and acquisition.






Grossman and Hart (1983) took into account
the ex-ante efficiency in an agency setting in order to derive the predictions
of a company’s financing decision. They explained the fact that an initial
entrepreneur looks forward to increase the value of the firm with few
disciplinary mechanism which forces the entrepreneur for choosing the level of
debt which increases the value of the firm.


Novaes and Zingales (1999) explained that
there is a difference between the viewpoint of shareholders and the viewpoint
of managers in terms of an optimal choice of debt. They also said that the
conflict of interest between shareholders & managers arises over financing
policy because of some reasons.  


Velnampy and Partheepkanth (2013) proved
through their study that the relationship between corporate governance and firm
performance are significant. They got the result through multiple regression
analysis. In their regression analysis, they found a positive impact of
corporate governance on the return of equity.


Klapper & Love (2004) conducted a
research on corporate governance which emphasized that a better corporate governance is correlated with
better operating performance and market valuation of the companies.


Talukder, Mullah, Rafiq, and Vedd (2007) have made a research on
corporate governance and the performance of the firms. They said that there is
a significant positive relation of sponsor holding and government holding firm
performance but the relationship of institutional holding is insignificant to
the performance of the firms


and Kanpang (2011) have intended to connect corporate governance with
organizational performance in Nigeria through a study. In that study, they
found a strong relationship between corporate governance variables and the
performance of firms. They also found no differences between the reliability of
financial reporting of quoted and unquoted firms.