Corporate governance, accountability and financial performance in the Maltese gaming sector

Abstract

Purpose: This study aims to: (i) assess the extent to which accountability and transparency are embedded in the corporate governance frameworks of Maltese gaming companies, (ii) identify the primary challenges in sustaining these principles, and (iii) examine how these principles examine the relationship between these principles and the financial performance of such companies.

Design/Methodology/Approach: A predominantly qualitative research approach was adopted, complemented by quantitative elements. Eighteen semi-structured interviews were conducted with key stakeholders, including gaming company representatives, audit professionals, and the Malta Gaming Authority. A corporate governance index was constructed from interview data, and financial statements for 2020-2023 were analysed to derive revenue figures.

Findings: Accountability and transparency are generally prioritised; however, governance standards vary, with publicly-listed firms adopting more robust frameworks. A positive and statistically significant relationship between governance and financial performance was observed in Business-to-Consumer companies. In Business-to-Business firms, the relationship remained positive but was not statistically significant. Finally, the findings indicate that the main challenges relate to regulatory compliance, the difficulty of safeguarding sensitive information, and people-related issues.

Originality/Value: This study contributes to the corporate governance literature by providing sector-specific evidence from Malta, a highly regulated European gaming jurisdiction. It develops and applies a corporate governance index to examine accountability and transparency practices and provides evidence that the governance–financial performance relationship differs according to business model. In particular, the findings reveal a significant positive association between governance quality and revenue among B2C companies, while no statistically significant relationship is identified among B2B companies. The study further highlights the implications of regulatory fragmentation, ownership structure and disclosure constraints for governance within highly regulated industries.