Does Corporate Governance Drive Financial Performance? Empirical Evidence from Palestinian Non-Financial Listed Firms

This study examines the effect of selected corporate governance mechanisms on the financial performance of non-financial companies listed on the Palestine Exchange during 2017-2024. The analysis focuses on board independence, gender diversity, foreign board membership, firm size and leverage, while financial performance is measured by return on assets and return on equity. Panel data were collected from 33 listed non-financial companies. After accounting for lagged performance in the regression models, the empirical estimations are based on 231 balanced observations. Panel estimated generalised least squares with random effects and panel-corrected standard errors was employed to account for firm-level differences and potential heteroscedasticity. The findings indicate that past profitability has a positive and statistically significant effect on current return on assets and return on equity, suggesting persistence in firm performance. Firm size also shows a positive and significant relationship with both performance measures, whereas leverage has a negative and statistically significant effect on return on assets and return on equity. Foreign board membership is negatively associated with return on assets but is not statistically significant in the return on equity model. Board independence and gender diversity do not show statistically significant effects. The results suggest that financial structure and firm scale are more strongly associated with performance than formal board-composition characteristics in the Palestinian non-financial listed sector.