Corporate Governance and Performance of Banking Firms: Evidence from Indonesia, Thailand, Philippines, and Malaysia

emerging market, such as Indonesia, Thailand, Philippines and Malaysia. Particularly, the financial
institutions have implemented corporate governance reforms to enhance the protection of shareholders and
stakeholders interest. The consequences emerge as it allows for greater monitoring especially by the
shareholders. The objective of this study is to measure the corporate governance and performance in
banking sectors in particular, which is determining by the corporate governance mechanisms. In the last
part, this study attempts to identify whether there exist any differences in the monitoring mechanisms of
banking firms and non-banking firms. This study found that only the foreign shareholder which is represent
of the ownerships monitoring mechanisms are significantly negatively related with corporate performance
measures in the banking firms in Asian emerging markets. Second, the Internal Control Monitoring
Mechanisms showed the insignificant relationship with corporate performance, but only one of the internal
control monitoring mechanisms which is CEO duality provides evidence in order to explain the relationship
better. Third, the disclosure monitoring mechanisms through the big 4 external auditor is significantly
related to corporate performance, instead of the big 3 rating agency. Last, there are similarities between
bank and non-bank in terms of corporate governance monitoring mechanisms.

Keywords: corporate governance, firms’ performance, monitoring mechanisms.