Analyzing The Impact of Corporate Governance on Firm Performance a Case Study of New Kabul Bank

Abstract

This study investigates the impact of corporate governance practices on the firm performance of New Kabul Bank in Afghanistan. Specifically, it examines the effects of board structure and independence, audit committee effectiveness, transparency and disclosure, and shareholder rights and protection on the bank’s financial and operational performance. A quantitative research design was employed, and data was collected from 184 employees using structured questionnaires. Descriptive statistics, regression analysis, and inferential tests were conducted to examine the relationships between governance mechanisms and firm performance. The findings reveal that audit committee effectiveness and shareholder rights and protection have a significant positive impact on firm performance, highlighting their critical role in enhancing accountability, risk management, and stakeholder confidence. In contrast, transparency and disclosure, as well as board structure and independence, were found to have no statistically significant effect on performance, suggesting that these mechanisms may require stronger institutional support or cultural adaptation to influence outcomes effectively. The regression model explained 86% of the variance in firm performance (R² = 0.860), indicating that corporate governance practices collectively contribute substantially to organizational performance. The study concludes that targeted governance mechanisms that directly enhance oversight and investor protection are more effective in improving firm performance than structural reforms alone. Based on these findings, recommendations include strengthening audit committees, enhancing shareholder rights, and providing governance training to management and employees. The study is limited by its focus on single bank and cross-sectional design, and future research could expand to multiple banks, incorporate longitudinal data, and include additional governance variables for a more comprehensive analysis.