THE IMPACT OF CEO CHARACTERISTICS ON FINANCIAL PERFORMANCE: THE MEDIATING ROLE OF CORPORATE GOVERNANCE IN COMMERCIAL BANKS LISTED ON THE IRAQ STOCK EXCHANGE

Mostafa ABD Alhussein Almansoori; Basim Mohammed Merhej; Ali Nadhem Abdulameer

Authors

Mostafa ABD Alhussein Almansoori College of Administration and Economics, AlMuthanna University, Iraq
Basim Mohammed Merhej College of Administration and Economics, AlMuthanna University, Iraq
Ali Nadhem Abdulameer College of Administration and Economics, AlMuthanna University, Iraq

Abstract

This paper explores how the attributes of CEOs affect the financial performance of commercial banks that are listed on the Iraq Stock Exchange with special interest on how corporate governance mediates this relationship. Based on the Upper Echelons Theory and Agency Theory, the study will focus on the effects of CEO education, financial expertise, tenure, and age on the performance of the bank both directly and indirectly through the process of governance. The panel data were observed using a quantitative research design and the sampled data were available in the form of annual reports and corporate governance disclosure of publicly available Iraqi commercial banks during the year 2020-2024. The proposed hypotheses were tested using multiple regression and mediation analysis methods.

According to the empirical findings, the characteristics of CEOs positively and significantly impact the financial performance, which implies that executive human capital is a decisive factor of profitability and efficiency at the operational level of the banking industry. The results also indicate that corporate governance has a positive and significant effect on financial performance and it is positively affected by CEO qualities. Even more importantly, mediation analysis confirms that corporate governance is a strong intermediary variable relating CEO education, financial expertise, and tenure and financial performance whereas the mediator role of CEO age is not as strong.

This finding highlights the need to have sound governance systems in the conversion of the CEO human capital into sustainable financial performance, especially in emerging markets with weak institutions and regulatory migration. The study is significant to the literature by availing evidence to the Iraqi banking background as well as give practical implications to the policy makers, regulators and boards of directors with respect to the executive selection and governance reforms in order to improve financial stability and performance.