Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

The Relationship Between Corporate Governance and Business Performance

Joy Kweku Sakyi, Ayomide Kashim Ibrahim, Chizoba Michael Okafor, Leslie, Wedraogo, Sadick Essandoh, Jennifer Olatunde-Thorpe

Abstract

This study critically investigates the relationship between corporate governance and business performance through a systematic literature review of peer-reviewed publications from 2020 to 2025. The primary objective is to examine how core governance mechanisms—such as board composition, ownership structure, and transparency—impact financial and non-financial performance indicators across sectors and regions. Drawing on agency, stakeholder, and stewardship theories, the study synthesizes empirical findings to identify patterns, contradictions, and research gaps within the governance–performance nexus. Data was sourced from academic databases including Scopus, Web of Science, and ScienceDirect, and analyzed thematically using PRISMA guidelines. The findings reveal that effective corporate governance positively influences organizational performance, although the strength and nature of this relationship vary by industry and geographic context. Governance mechanisms such as board independence and audit committee strength are especially critical in fostering accountability and strategic alignment. However, challenges in establishing causality and generalizability persist due to methodological inconsistencies and contextual differences. The study contributes to the field by providing actionable insights for business leaders, investors, and policymakers, advocating for adaptive and stakeholder-inclusive governance frameworks. It concludes by highlighting the need for further empirical research using longitudinal and cross-sectoral approaches to deepen understanding and inform governance reforms in an evolving global business environment.

Keywords

Corporate GovernanceBusiness PerformanceBoard StructureSystematic

References

Adekunle, B. I., Chukwuma-Eke, E. C., Balogun, E. D., & Ogunsola, K. O. (2023). Integrating AI-driven risk assessment frameworks in financial operations: A model for enhanced corporate governance. International Journal of Scientific Research in Computer Science, Engineering and Information Technology, 9(6), 445–464. https://doi.org/10.32628/IJSRCSEIT Aguilera, R. V., Aragón-Correa, J. A., & Marano, V. (2021). The corporate governance of environmental sustainability. Journal of Management, 47(6), 1468–1497. https://doi.org/10.1177/0149206321991212 Aguilera, R. V., Ruiz-Castillo, J. Y., & Marano, V. (2025). Toward an Updated Corporate Governance Framework: Fundamentals, Disruptions, and Future Directions. Journal of Management and Governance, 29(1), 1–25. https://doi.org/10.1177/23409444251320399 Ajayi, J. O., Ayodeji, D. C., Erigha, E. D., Eboseremen, B. O., &Ogedengbe, A. O. (2023). Scaling knowledge exchange in the global data community: The rise of dbt Nigeria as a benchmark model. Ajayi, J. O., Ogedengbe, A. O., Oladimeji, O., Akindemowo, A. O., &Eboseremen, B. O. (2021). Credit risk modeling with explainable AI: Predictive approaches for loan default reduction in financial institutions. Akindemowo, A. O. A. O., Obuse, E., & Ajayi, J. O. (2024). Reviewing the impact of global regulatory changes on securities and investments.International Journal of Social Science Exceptional Research, 3(4).* Ayodeji, D. C., Obuse, E., Oladimeji, O., & Ajayi, J. O. (2022). Advanced machine learning, insurtech& cloud data stack.Journal of Frontiers in Multidisciplinary Research, 3(1).* Ayodeji, D. C., Oladimeji, O., & Oluwagbenga, J. (2022). Operationalizing analytics to improve strategic planning: A business intelligence case study in digital finance.Journal of Frontiers in Multidisciplinary Research, 3(1).* Aragon-Correa, J. A., Marcus, A., & Vogel, D. (2020). The institutional challenges of regulation: The heterogeneous effects of mandatory and self-regulatory pressures on firms’ environmental strategies. Academy of Management Annals, 14(1), 339–365. https://doi.org/10.5465/annals.2018.0014 Al-Matari, E. M., Al-Swidi, A. K., & Fadzil, F. H. B. (2020). Board of directors, audit committee characteristics and the performance of Saudi Arabia listed companies. International Journal of Accounting and Financial Reporting, 10(1), 1–21. https://doi.org/10.5296/ijafr.v10i1.16789 Beche?, P.-D., & Anghel, F. G. (2025). Corporate Governance and Performance. Insights from a Bibliometric Perspective for an Emerging Country. CECCAR Business Review, 6(2), 59– 77. https://doi.org/10.37945/cbr.2025.02.07 Bertrand, M., & Mullainathan, S. (2021). Are CEOs rewarded for luck? The ones without principals are. The Quarterly Journal of Economics, 116(3), 901–932. https://doi.org/10.1162/00335530152466269 Bertrand, M., & Mullainathan, S. (2021). Are CEOs Rewarded for Luck? The Ones Without Principals Are. The Quarterly Journal of Economics, 116(3), 901–932. https://doi.org/10.1162/00335530152466269 Catan, E., & Kahan, M. (2025). Corporate Governance and Firm Value. NYU Law and Economics Research Paper No. 25-01. https://doi.org/10.2139/ssrn.5127297 Council of Institutional Investors (CII). (2025). Policies on Corporate Governance. https://www.cii.org/corp_gov_policies%E2%80%8B ?upi?, M., Dragi?evi?, P., &Vržina, S. (2024). Corporate Governance and Financial Performance: The Impact of the COVID-19 Pandemic. Proceedings of the 5th International Conference Economic and Business Trends Shaping the Future, 46–53. http://hdl.handle.net/20.500.12188/31954 Eboseremen, B. O., Ogedengbe, A. O., Obuse, E., Oladimeji, O., & Ajayi, J. O. (2022). Developing an AI-driven personalization pipeline for customer retention in investment platforms.Journal of Frontiers in Multidisciplinary Research, 3(1), 593–606 Diligent. (2024). Top trends in corporate governance for 2025 & beyond. https://www.diligent.com/resources/blog/corporate-governance-trends Green, J., & Hand, J. (2024). Leadership diversity and firm performance: A critical reassessment. Journal of Business Ethics, 178(2), 345–367. https://doi.org/10.1007/s10551-023-05123- 9 Guluma, T. F. (2021). The impact of corporate governance measures on firm performance: The influences of managerial overconfidence. Future Business Journal, 7(1), 50. https://doi.org/10.1186/s43093-021-00093-6 Guluma, T. F. (2021). The impact of corporate governance measures on firm performance: The influences of managerial overconfidence. Future Business Journal, 7(1), 50. https://doi.org/10.1186/s43093-021-00093-6 Heo, Y., & Yang, Y. (2023). The impacts of corporate governance on firms' performance: Evidence from Vietnam. Journal of Financial Reporting and Accounting, 21(1), 1–18. https://doi.org/10.1108/jfrc-01-2023-0012 Ilahiyah, M. E., Yahya, D. R., Triyonowati, T., Khan, M. A., &Palupi, D. (2025). The Impact of Corporate Governance on Firm Performance: A Review. Asian Journal of Economics, Business and Accounting, 25(1), 292–304. https://doi.org/10.9734/ajeba/2025/v25i11651 Kaczmarek, S. C., Kimino, S., & Pye, A. (2021). Ownership structure and firm performance: Evidence from the UK. British Journal of Management, 32(2), 456–472. https://doi.org/10.1111/1467-8551.12410 Li, Y., & Zhang, L. (2022). Corporate transparency and firm performance: Evidence from China. Journal of International Financial Markets, Institutions and Money, 77, 101456. https://doi.org/10.1016/j.intfin.2021.101456 Natto, D., &Mokoaleli-Mokoteli, T. (2025). Short- and long-term impact of governance on firm performance in emerging and developed economies: A comparative analysis. International Journal of Disclosure and Governance. https://doi.org/10.1057/s41310-024- 00271-2 Ogunsola, K. O., Balogun, E. D., &Ogunmokun, A. S. (2022). Developing an automated ETL pipeline model for enhanced data quality and governance in analytics. International Journal of Multidisciplinary Research and Growth Evaluation, 3(1), 791–796. https://doi.org/10.54660/.IJMRGE.2022.3.1.791-796 Paine, L. S. (2020). Covid-19 Is Rewriting the Rules of Corporate Governance. Harvard Business Review. https://hbr.org

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT