Abstract
This research examines the influence of corporate governance practices on leverage and financial performance of firms in financial system of Kazakhstan. The research employs level data for financial institutions, listed on Kazakh Stock Exchange by using multivariate regression analysis under fixed effect model approach. Results of panel study showed that board size is significantly positively correlated with debt to equity ratio, and with the number of independent directors. Private investors’ shareholding is significantly negatively correlated with debt to equity ratio. CEO/Chair duality is significantly positively correlated with the debt to equity ratio. The size of form has also significant effect on the leverage level. Analysis of the banking sector showed a negative relationship between managerial ownership (MO) and both market value (Tobin’s Q) and performance (ROA and ROE). Moreover, there are statistically significant relationship between bank performance and stock market capitalization, scaled to GDP of country, and there is statistically significant negative relationship between Tobin’s Q and net interest income to total operating income as a proxy for income diversity. The findings also show higher risk-taking behavior (capital market indicators as risk measure, Z-score and the percentage of non-performing loans in total loans as NPL/L). There is a positive relation between MO and Z - scores, and negative relationship between MO and NPL. Moreover, there are significant relationship between banking risk and development of the financial markets which is proxy by private credit and stock market capitalization, both scaled by GDP of country, and, there is statistically significant negative relationship between debt intensity and risk.