Corporate Governance Implications for Sustainable Performance: Focus on Leading Energy Producers in Denmark, Estonia, Latvia, Lithuania, and Sweden

Abstract

This paper aims to evaluate corporate governance in relation to enterprise performance indicators in order to enhance it. The intention is not only to align with the interests of shareholders, but also to foster competitive, sustainable, and inclusive growth. For this purpose, the leading energy producer in each of the five countries—Denmark, Estonia, Latvia, Lithuania, and Sweden—was investigated to evaluate their corporate governance performance. An analysis was conducted, employing regression analysis, Pearson correlation, and descriptive statistics. The influence of corporate governance on the performance of chosen enterprises was examined, utilising specifically developed models. The findings reveal that the corporate governance variables are diverse, and financial metrics exhibit significant variability, reflecting the complexity of the energy industry. The research results confirm that larger and more varied boards positively impact the performance of state-owned power suppliers and increase their net income. The presence of independent members was also found to contribute to the net income growth of state-owned power suppliers. However, the study indicated that the frequency of audit meetings does not necessarily increase earnings. Still, larger audit committees can contribute to CG decision-making processes concerning debt management. The results also implied the need to consider the qualifications of the board members and its composition for proper power interruption management to minimise the frequency and duration of power outages. Therefore, it must be of pivotal focus for respective corporate governance duties. In this respect, the need for more specific and regular assessments was also found to be justified regarding industry-specific challenges related to power system disruptions. Customer-centric strategies should deserve relevant attention as well. The enforcement of the management audit function could be a solution. Consequently, assessing the governance structures and decision-making processes must be systematic for energy producers due to the business dynamics leading to the revaluation of the evolving challenges and possible solutions aimed at the competitive and sustainable development of the energy sector.