The implementation of a corporate governance scorecard in Maltese banks

Abstract

Corporate governance is an essential element that helps to foster transparency, fairness, responsibility and accountability in the corporate world. Post the 2009 financial crisis, corporate governance has gained much attention and companies are growing more conscious of their governance practices and aim to have good corporate governance. This dissertation aims to identify whether the implementation of a corporate governance scorecard in Maltese banks would be beneficial. Furthermore, the researcher took the liberty to analyse whether the level of corporate governance in Maltese banks has any impact in firm performance. Many studies by many different scholars have been conducted to investigate this relationship, but the findings have been mixed and inconclusive. The researcher uses a corporate governance scorecard to assess the level of corporate governance in six Maltese banks and the Scorecard used was based on one developed by the Bombay Stock Exchange and the International Financial Corporation. This research assesses four listed banks and two non-listed banks and compares them. Additionally, the correlation between corporate governance and four performance evaluators – shareholder returns, equity prices, return on assets and profits before tax – were assessed to try to identify whether there is any relationship. Findings showed a very basic level of corporate governance in all six Maltese banks especially in terms of disclosure of material information, transparency and treatment of stakeholders. Moreover, there is a positive relationship between corporate governance and shareholder returns.