Corporate governance and performance of small and medium sized enterprise (SME): evidence from Bangladesh
This study examines corporate governance mechanisms and firm performance of medium and small sized enterprises (SMEs) in Bangladesh. From an observation of 769 firm years it is found that there is a significant positive relationship between the following: largest block holding and firm performance; executives pay and firm performance; and debt ratio and firm performance under market based performance measure in Bangladeshi SMEs. . While it is found that there is a significant negative relationship between debt to equity ratio and firm performance under ROA performance measure. However, it is vindicated that there is no relationship between other corporate governance variables with firm performance of SMEs under any of the measures. The findings support mostly the principal-agency relationship instead that of the theory on stewardship principles. The findings imply that the underlying differences among SMEs give rise to a further consideration for good corporate governance practices. As well, the ramification of this study can be considered an extension to the literature on SMEs in the context of a less developed country.