Does Corporate Governance Affect The Corporate Financial Sustainability? Panel Empirical Evidence Of An Emerging Capital Market

This study examines how corporate governance practices affect the financial sustainability of manufacturing companies in Bangladesh. The study employed a dynamic panel data auto-regressive methodology within the framework of a two-step system generalized method of moments (2-SGMM) estimation technique. Financial sustainability is shown by operational self-sufficiency (OSS), financial self-sufficiency (FSS), return on equity (ROE), and return on assets (ROA), in that order. Using data from 109 companies over a decade, the research found that board size positively impacts financial self-sufficiency, while board diversity improves overall financial sustainability. However, board meeting frequency and independence, as well as audit committee size, have a limited impact on financial performance. The study also revealed that CEO compensation negatively affects financial sustainability, while CEO tenure has a positive influence. The findings suggest that strengthening corporate governance practices, especially by increasing board diversity and promoting independent directors, can enhance the financial health of manufacturing firms in Bangladesh.