The Relationship Between Corporate Governance and Business Performance

Abstract

This study critically investigates the relationship between corporate governance and business performance through a systematic literature review of peer-reviewed publications from 2020 to 2025. The primary objective is to examine how core governance mechanisms—such as board composition, ownership structure, and transparency—impact financial and non-financial performance indicators across sectors and regions. Drawing on agency, stakeholder, and stewardship theories, the study synthesizes empirical findings to identify patterns, contradictions, and research gaps within the governance–performance nexus. Data was sourced from academic databases including Scopus, Web of Science, and ScienceDirect, and analyzed thematically using PRISMA guidelines. The findings reveal that effective corporate governance positively influences organizational performance, although the strength and nature of this relationship vary by industry and geographic context. Governance mechanisms such as board independence and audit committee strength are especially critical in fostering accountability and strategic alignment. However, challenges in establishing causality and generalizability persist due to methodological inconsistencies and contextual differences. The study contributes to the field by providing actionable insights for business leaders, investors, and policymakers, advocating for adaptive and stakeholder-inclusive governance frameworks. It concludes by highlighting the need for further empirical research using longitudinal and cross-sectoral approaches to deepen understanding and inform governance reforms in an evolving global business environment