The Impact of Corporate Governance on Financial Performance through the Company’s Reputation

Abstract

The researchaims to studythe effect of corporate governance on financial performance, and to explorethe extent to which corporate governance mechanisms affect the company’s reputation.Employing agency theory as the basis for the conceptual model, the study investigateswhether company’s reputation variables affect the financial performance of Iraqi financial companies. Using multiple regression analysis, the study explored nine corporate governance indicators, eight financial performance indicators, and five company reputation indicators. The data for the analysis wasdrawn from the test conducted on 20 banks listed inthe Iraqi Stock Exchange over the period of five years (2018-2022). The results indicate the presence of positive and negative relationships, as well asthe evidence of no effect ofthe relationship between corporate governance indicators and company reputation on financial performance. The findings suggest that the choiceofadequatecorporate governance indicators and sound practices enhance the company’s reputation and, thereof, the bank’s financial position. This study contributes towardsthe understanding of how governance affects a company’s reputation, attracting investors and customers, and ultimately financial performance. The results bear implications for academics and policy makers in determining enhanced reputationand financial performance of company.