The Nexus between Corporate Governance and Financial Performance of the FTSE 100 Index Entities in the United Kingdom

Abstract

The place of corporate governance components and their influence on the financial performance of organizations have continued to be at the forefront of discussion about the non-financial determinants of profitability. In this study, our primary objective is to investigate the influence of corporate governance components (Board Size, Audit Committee Size, Board Independence and Board Gender Diversity) on the performance of FTSE 100 Index Companies measured as Return on Asset, Return on Equity, Tobin’s Q and Share Price. Secondary data were collected from 2010–2019. To analyze the data collected, Panel data regression analysis with Fixed and Random Effects, OLS, and FGLS estimation techniques were employed. The results of the analysis revealed that Audit Committee Size and Board Gender Diversity have a significant positive influence on financial performance measured as Return on Equity (ROE) and Tobin’s Q, while Board Gender Diversity has a significant positive effect on firm performance measured as Share Price.