New Challenges in Accounting and Finance

Corporate scandals that occurred before the Sarbanes-Oxley Act demonstrated weaknesses in the compliance environment, arising from the low level of involvement of the middle management with internal controls. Regarding middle management in the banking sector, which needs to monitor risks and ensure compliance with laws and regulations, no studies were found that correlated managers’ demographic variables with compliance and financial performance. Therefore, the objective of this research is to evaluate whether compliance mediates the effect of the demographic characteristics of intermediary managers on the financial performance of bank branches. We use the Generalised Structural Equation Modeling (gSEM) as a data analysis technique to determine whether compliance mediates managerial demographics on the financial performance of bank branches. The results suggest that compliance mediates managerial demographics on financial performance only for some demographic characteristics.