International Journal of Engineering and Applied Sciences (IJEAS) ISSN: 2394-3661, Volume-5, Issue-4, April 2018 89 www.ijeas.org Abstract— The objective of this study is to explore the Linkage between Corporate Governance and Financial Performance in an Emerging Economy in the banking sector of Bangladesh. The data have been taken from primary sources. Data were collected from 22 listed banks on the Dhaka Stock Exchange (DSE). This data were analyzed by using different statistical tools like structural equation model (SEM) with the help of SmartPLS-3 software. It is found that some important factors like enablers that improve corporate governance, obstacles that affect corporate governance; those are the influential factors to build performance of selected bank. This study further supports the argument that when bank implement good corporate governance principles, it experiences improved financial performance. This study, with its emphasis on developing a corporate governance model, makes a significant contribution to the body of knowledge on corporate governance in emerging economies like Bangladesh. Index Terms— Corporate Governance, Financial Performance, Discloser & Transparency, Good corporate Governance, Structural Equation Modeling (SEM) I. INTRODUCTION Meaning of Corporate Governance is different things to different people. Bangladesh achieved a notable economic growth during the past few years where the GDP growth rate is approximately 6% and above, balance of payments is decreased, foreign exchange reserve is in an increasing trend and Foreign Direct Investment (FDI) is increased 142% in the last four years which indicates the success of Bangladesh economy. The long-term sustainability of the Bangladesh “success” story depends critically on the state of corporate governance in the country. Many empirical studies have been conducted over the last two decades to investigate a relationship between corporate governance and a firm’s performance in the world. However, similar studies in the context of Bangladesh are very rare. Corporate governance has become a concern in developing economies since the financial scandals in the past, which have resulted in demands for improved corporate governance practices (Baydoun et al., 2012). Following the work of Al-Faki (2006), the performance of the banking sector depends on the behavior and patronage of the people towards its services. Magdi and Nadereh, (2002) have said that the process of ensuring that business performs smoothly and investors receive a fair profit Md. Saiful Islam Chowdhury, Lecturer, Department of Business Administration, IBAIS University, Bangladesh, Mobile No.: +8801739824607 Farhana Ferdous, Lecturer, Department of Business Administration, IBAIS University, Dhaka, Bangladesh, Mobile No.: +8801914839363 MD. Omar Faruk, Senior Lecturer, Department of Business Administration, Daffodil Institute of IT, Dhaka, Bangladesh, Mobile No.: +8801683689117 is described as corporate governance. Metrick and Ishii (2002) see corporate governance as a commitment to pay a fair return on the capital invested and the willingness to operate a firm efficiently given investments. This complements the position of Shleifer and Vishny (1997) that shareholders and creditors confer on managers the responsibility to invest in projects with positive net present values. Corporate governance in both developed and developing countries has attracted considerable attention in academic research (Mallin, 2004; Reed, 2002; Clark, 2004; Solomon & Solomon, 2004; Sternberg, 2004; Weir & Laing, 2001). CG contributes to growth and financial stability by reinforcing market confidence, financial market integrity and economic efficiency (Organization for Economic Cooperation and Development (OECD), 2004). Good corporate governance is an effective tool for helping a firm to attain better performance (Ghabayen, 2012). The corporate governance code in Bangladesh is based on the OECD Principles of Corporate Governance (2004). Many studies have investigated the relationship between corporate governance and financial performance (Jensen & Meckling, 1976; Jensen, 1993; Adams & Mehran, 2008; Haniffa & Hudib, 2006; Bhagat & Black, 2001; Gompers, Ishii & Metrick, 2003; Klapper & Love, 2004; Ramdani & Van Witteloosuijn, 2009; Trabelsi, 2010; Griffin et al., 2014). Onakoya, Adegbemi Babatunde O, Fasanya, Ismail O, Ofoegbu and Donald Ikenna (2014) conducted a study to explore the effect of corporate governance characteristics on bank performance in Nigeria. The general area of research is governance, and the specific focus is corporate governance principles, practice and its effect on financial performance in a developing country, like Bangladesh. The aim of the research is to improve governance in Bangladesh mainly commercial bank. Our findings are important to regulators, investors, academics, and others who contend that good corporate governance. II. OBJECTIVE OF THE STUDY The problem in this study was to determine the opinion of the selected employees who are engaged in management level in private commercial banks in Bangladesh regarding their financial performance. To determine the corporate governance factors those influence on the bank financial performance of private commercial banks in Bangladesh. To give some suggestions for the improvement of overall bank performance by using corporate governance concept of private commercial banks in Bangladesh. Linkage between Corporate Governance and Financial Performance in an Emerging Economy Md. Saiful Islam Chowdhury, Farhana Ferdous, MD. Omar Faruk