Impact of Corporate Governance Structures on Firm Financial Performance in the Viewpoint of Agency Theory
DOI:
https://doi.org/10.66348/jbg.26.a66Keywords:
Corporate Governance; Firm Financial Performance; Board Structure; Audit Committee; Ownership StructureAbstract
This paper analyzes how the structure of corporate governance influences the financial performance of the firms that are listed on Bursa Malaysia in relation to the period of 2010 to 2025. It analyzes the impact of the essential governance features such as Board characteristics, CEO duality, audit committee characteristics, and ownership structure on firm performance, measured by return on assets (ROA), return on equity (ROE) and Q of Tobin. The findings reveal that board independence and audit committee effectiveness and ownership structure have positive and significant effect on firm financial performance, while the CEO duality is negatively related to financial performance. These findings favour agency theory viewpoint and the need to ensure effective monitoring and oversight of enhancement of firm value. The tests of robustness substantiate the results, and additional analyses show that the mechanisms of governance have a greater effect in manufacturing firms. The research adds to the body of literature by presenting empirical data of Malaysia, whereby the role of the governance practices on enhancing the firm performance under the context of an emerging market is investigated. The results also provide effective suggestions to policy makers and corporate stakeholders to enhance the governance frameworks and sustainable financial performance.
Received: 2026-05-06 | Revised: 2026-08-21 | Accepted: 2026-10-16 | Online Available: 2026-10-16
Declarations
Ethics and Guidelines: The study was conducted in accordance with the Declaration of Helsinki. The ethical approval specifically covers the research procedures and data collection activities conducted for this study.
Consent to participate: Written informed consent was obtained from all participants prior to data collection. Consent was obtained using a standardized written form, signed by each participant before participation in the survey.
Consent to publish: The authors have provided consent to publish.
Competing interests: The authors declare no competing interests.
Data availability statement: Data will be made available on reasonable request from the corresponding author.
Funding: This research received no external funding.
Clinical Trial Number: Not Applicable.
Declaration of using generative AI: During the preparation of this work the author(s) used ChatGPT in order to correct the grammatical errors. After using this tool/service, the author(s) reviewed and edited the content as needed and take full responsibility for the content of the published article.
Author Contributions: M.H.A.: Conceptualization, methodology, writing—original draft preparation, writing—review and editing. All authors have read and agreed to the published version of the manuscript.
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Data Availability Statement
Data will be made available on reasonable request from the corresponding author.
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