Abstract:
As the different literatures shows corporate governance has significant impact on both the firm performance and stockholder interests for this reason it’s essential to have understanding of those corporate governance factors which affect firm’s performance. Having this; The aim of this research is to identify the main factors that determine corporate governance and their effect on performance of private commercial banks in Ethiopia(PCBE), to measure the actual effects of internal and external corporate governance factors on performance of private commercial banks in Ethiopia, to rank the factors according to their degree of influence on performance, performance was measured by return on asset (ROA). Explanatory research design and purposive sampling method was used for selecting six sample banks for the study. The audited annual report of private commercial banks of Ethiopia (PCBE) was used covering period of ten years (2007-2016). Regression model with different independent variables such as Board size, Audit committee, gender diversity, bank size (asset owned by bank), capital adequacy ratio, legal reserve, liquidity and dependent variable return on asset was made. Both time series and cross sectional data was analyzed by using descriptive, correlation and simple regression analysis through STATA 2013 software. The study found out that: the internal corporate governance dimension audit committee has a positive significance influence on performance of private commercial banks in Ethiopia and the external factors, capital adequacy ratio and liquidity ratio have a negative significance impact on Ethiopian private commercial banks performance. Whereas in these study factors like, board size, gender diversity, bank size and legal reserve doesn’t have significant impact for performance of private commercial banks in Ethiopia.
