Influence of Bank Type on the Relationship Between Corporate Governance and Market Performance: Insights from Emerging Countries

Purpose: The market performance of banks is highly impacted by corporate governance and type of bank. This study aims to empirically examine the influential impact of bank type on the relationship between corporate governance and bank’s market performance.Design/Methodology/Approach: The study employed deductive approach and used a sample of 456 bank-year observation of 38 banks selected from emerging economies over the period from 2011 to 2023. The GMM - Generalized Method of Moments estimation was used to test the research hypothesis and to control the endogeneity issues in panel data.Findings: The study reported a positive and significant effects of board size and board independence on the market performance of the banks such as Tobin’s Q by considering three controlling factors namely, leverage, liquidly and asset quality. Further, bank type has significant moderating effect on the link between corporate governance measures and bank’s market performance.Implications/Originality/Value:&This study contributed to the broader understanding of corporate governance by highlighting the role of bank type in shaping the effectiveness of governance mechanisms. Moreover, this study attempts to connect the empirical findings with governance theories for highlighting the role of governance in measuring the performance of banking sector of emerging economies that will facilitate decision makers and bank authorities to adopt such corporate governance mechanism that will enhance bank’s market performance.