Exploring the Influence of Corporate Governance on the Financial Performance. Case Study of the Energy Sector
Exploring the Influence of Corporate Governance on the Financial Performance. Case Study of the Energy Sector

Author(s): Leredana-Georgia Nitu (Ivan)
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Corporate governance; Financial performance; Energy sector
Summary/Abstract: Given the region’s commitment to sustainable and renewable energy sources as well as its reliance on conventional fossil fuels, the energy industry in Europe shines in the light of contemporary economies. The European energy industry is at a turning point and is prepared to change in response to new environmental concerns and shifting market dynamics. This paper aims to investigate whether the corporate governance score (GOV) of companies operating in the energy sector is associated with their corporate financial performance (CFP). The research covered data from 103 companies in the energy sector collected from Thomson Reuters Eikon for the period 2017-2021. The research used the regression and correlation analysis between GOV performance and its components and an accounting-based measure of profitability: total revenue. The data used in this study were analyzed using SPSS Software. The results show a partial but positive correlation between the management mechanisms on financial performance and a full positive influence of CSR strategy on financial performance; the shareholder score shows no impact. The energy sector is an environmentally sensitive yet understudied industry, and the present research helps to determine what has to be improved from a sustainability point of view.

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