The Profitability Symphony: Orchestrating Success with Banks Internal Factors and the Moderating Role of Corporate Governance - Insights from Palestine رسالة دكتوراة

Abstract

This study investigates the influence of internal organizational factors—including organizational culture, CEO mindset, CEO letter sentiment, leadership style, and corporate governance—on the profitability of Palestinian banks. It also examines the moderating role of corporate governance in enhancing the relationship between these factors and firm performance. A mixed-method approach was employed, combining survey data from banking professionals with secondary financial data from annual reports of Palestinian banks (2020– 2024). Structural equation modeling (SEM) and panel regression were used to test five key hypotheses. The study also conducted sentiment analysis on CEO letters to stakeholders and incorporated governance features as moderating variables. The results confirm that organizational culture, CEO mindset, CEO letters, and leadership style have significant positive effects on profitability, measured through ROA and Tobin’s Q. Moreover, corporate governance significantly moderates the relationship between internal factors and profitability, reinforcing the value of strong governance frameworks in driving sustainable performance. This research extends the application of Upper Echelons Theory, Behavioral Theory of the Firm, Agency Theory, and Signaling Theory within the context of emerging markets. It integrates psychological, behavioral, and structural variables into a comprehensive model of profitability. Bank managers and policymakers can enhance profitability by cultivating a strong organizational culture, promoting visionary leadership, and institutionalizing governance best practices. CEO sentiment in stakeholder communications also provides predictive insights for investors. The study is limited to Palestinian banks, which may reduce generalizability. Future research could extend the model across different sectors or regions, explore cross-cultural leadership dimensions, or incorporate machine learning in sentiment and governance analytics.