Corporate Governance, Sharia’ah Governance and Performance: A Cross-Country Comparison in the MENA Region

Abstract

This study examines the relationship between corporate governance bank’s operational (ROA), financial (ROE) and market performance (TQ) in both conventional and Islamic Banks.  This study examines 127 banks listed on the MENA countries for ten years (2008-2017). ‎The study independent variable is corporate governance principles, the dependent variables are return on assets (ROA); return on equity (ROE) and Tobin’s q (TQ). Also, the study utilizes bank and country specific control variables to help measuring the relationship between governance and bank’s Performance. The findings deduced from the empirical results demonstrate that sharia’ah governance significantly influenced the ROA and ROE. However, the corporate governance significantly influenced the TQ.  Furthermore, the results indicate that there are differences between sharia’ah governance and corporate governance with regard to operational, financial and market performance. The study provides insights about the differences in the relationship between sharia’ah governance, corporate governance, and the improvement of performance, which might be utilized by both banks to re-adopt the governance practices in enhancing the operational, financial and market performance.