Assessment of Financial Effects of Governance Factors in the Practice of Croatian Non-Financial Joint-Stock companies
Assessment of Financial Effects of Governance Factors in the Practice of Croatian Non-Financial Joint-Stock companies

Summary/Abstract: The aim of this paper is to assess the financial effects of governance factors in Croatian non‑financial joint stock companies. Building on theoretical foundations and prior empirical evidence, the study examines the impact of governance factors on the financial performance of 67 companies listed on the Zagreb Stock Exchange in 2023. Governance indicators were derived from the Questionnaire on Compliance with the Corporate Governance Code, from which 10 sub‑indices and an Expanded Croatian Corporate Governance Index (CCGIexp) were constructed. This index served as the primary explanatory variable in multiple linear regression models, estimated using three approaches: Standard OLS, OLS with robust standard errors, and quantile regression. Across all models, the results consistently indicate that governance factors do not exert a statistically significant effect on financial performance. Such findings may reflect market and structural conditions, the broader regulatory and institutional environment, or methodological challenges inherent in empirical research. Beyond their immediate explanatory value, the results carry important implications for both practice and theory. For practitioners, they highlight the need to consider contextual constraints when evaluating governance outcomes, while for scholars they underscore the importance of refining methodological approaches and advancing conceptual frameworks to better capture the complex relationship between governance and profitability.

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