Corporate governance is recognized as one of the most important implications to build a marketplace confidence and to attract positive investors in the organization specifically and the economy generally. Promoting good corporate governance standards considered to be very important in attracting investment capital, reducing risk and developing firms’ performance. The aim of this research was to examine the impact of corporate governance characteristics on firm performance in Bahrain Stock Exchange. Previous literature reviews presented in the study found that corporate governance are successful in improving firm’s performance. The study sample contained 42 Out of 48 Bahrain’s financial companies which are listed in Bahrain Stock Exchange during the period 2007-2011. The descriptive results indicated that our sample firms fulfill corporate governance variables about 61.2% for the entire period in the study. The empirical results indicate that performance measures such as Return on Assets and Return on Equity are significantly related to corporate governance in Bahrain. However, Earning Per share performance measure is not showing any significance impact related to corporate governance. Overall, this study found a positive influence of corporate governance mechanisms on performance for the entire firm in Bahrain Stock Exchange. Thus, it is recommended that further research be undertaken from different aspects: The effect of corporate governance variables and their impact on firm’s performance in the Gulf Cooperation Council (GCC) and the effect of Global Corporate Governance on performance during the current Global Financial Crisis.
Keywords: Bahrain Stock Exchange (BSE), Corporate Governance, Firm Performance
