Recent literature on Corporate Annual Reports (CAR) underlines that, in order to meet the changing needs of CAR users, more narrative (forward looking) information should be provided, with a focus on those factors that are liable for longer term value of banks financial performance. This paper investigates the Management Commentary portion (MC) and specifically the effect of Corporate Governance Information (CGI) on banks’ reporting performance mechanisms such as board structure, audit function, bank size and common equity.
Return on Assets (ROA) ratio is used as a proxy to measure financial performance. The data sample comprises of 86 worldwide banks during the period of deep economic crisis (2008–2011). Novelty of the study is the search for the effect of core characteristics of corporate governance on banks’ performance during the financial crisis period. The research uses a Panel Estimated Generalized Least Squares (EGLS) regression model in order to examine the aforementioned effect. The results of this research suggest that boards’ independence strongly supports banks’ efficiency and operations, as well as external audit contributes positively to banks’ efficiency during the crisis period.
Keywords: Corporate Governance Information (CGI), board structure, audit function, Management Commentary portion, economic crisis period.