IS CORPORATE GOVERNANCE IMPACT ON SHAREHOLDERS' WEALTH CREATION? A COMPARATIVE STUDY ON PUBLIC SECTOR AND PRIVATE SECTOR BANK'S IN INDIA

Abstract

Corporate governance is very important to enhance transparency, accountability and financial performance of the banking sector. This paper studies the effect of corporate governance factors on Return on Equity (ROE) and compares their efficiency between public and private sector banks in India and also to find out the relation between corporate governance practices and financial performance. The study is based on secondary data collected from the annual reports of five public sector banks and five private sector banks for the period 2020-21 to 2024-25. The data are analysed using descriptive statistics, correlation analysis and multiple regression analysis. The results show that governance variables are significantly related with ROE in private sector banks whereas there is no significant relationship in public sector banks. Further, it shows that governance factors affect ROE in private banks jointly but not in public banks. The study concludes that the corporate governance mechanisms are more effective in improving shareholders returns in private sector banks. There is a suggestion that public sector banks should improve their governance practices and committee effectiveness to improve their financial performance and shareholder value.