Impact of corporate governance and related controversies on the market value of banks

Effective corporate governance of financial institutions, particularly in the banking sector, is vital for the stability of the financial system and the prevention of financial crises. Thus, this study examines the impact of corporate governance and related controversies on the market value of banks. For this purpose, we utilized Refinitiv’s corporate governance scores, including management, shareholder value, and corporate social responsibility (CSR), as well as its corporate governance controversies scores to analyze their impact on the market value of 242 banks in 43 countries. Using Refinitiv’s ESG database from 2017 to 2021, we conducted a path analysis and found a positive and statistically significant relationship between the CSR strategy scores and the market value of banks as well as between the management scores and the market value of banks. Moreover, there is a statistically significant relationship between the corporate governance controversies scores and the market value of banks. [Display omitted] •Assessing governance scores from Refinitiv Eikon’s ESG Database (2017-21), for 242 banks in 5 regions & 43 countries.•There is a positive and statistically significant relationship between CSR strategy score and banks' market value.•There is a positive and statistically significant relationship between Management score and market value of banks.•There is a statistically significant relationship between corporate governance controversies and market value of banks.•First study to use Refinitiv's governance and controversy scores to analyze corporate governance's impact on banks' value.