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The Relationship between Corporate Governance Indicators and Firm Value: A Case Study of Karachi Stock Exchange

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  • Attiya Y. Javed

    (Pakistan Institute of Development Economics, Islamabad)

  • Robina Iqbal

    (Quaid-i-Azam University, Islamabad)

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    Abstract

    We investigated whether differences in quality of firm-level corporate governance can explain the firm-level performance in a cross-section of companies listed at Karachi Stock Exchange. Therefore, we analysed the relationship between firm-level value as measured by Tobin’s Q and total Corporate Governance Index (CGI) and three sub-indices: Board, Shareholdings and Ownership, and Disclosures and Transparency for a sample of 50 firms. The results indicate that corporate governance does matter in Pakistan. However, not all elements of governance are important. The board composition and ownership and shareholdings enhance firm performance, whereas disclosure and transparency has no significant effect on firm performance. We point out that those adequate firm-level governance standards can not replace the solidity of the firm. The low production and bad management practices

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    File URL: http://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper%20No.%2014.pdf
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    Bibliographic Info

    Paper provided by Pakistan Institute of Development Economics in its series PIDE-Working Papers with number 2007:14.

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    Length: 22 pages.
    Date of creation: 2007
    Date of revision:
    Handle: RePEc:pid:wpaper:2007:14

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    Related research

    Keywords: Corporate Governance; Firm Performance; Tobin’s Q; Agency Problem; Board Size; Shareholdings; Disclosures; Leverage; Code of Corporate Governance;

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    Cited by:
    1. Haris Arshad & Attiya Yasmin Javid, 2014. "Does Inside Ownership Matters in Financial Decisions and Firm Performance: Evidence from Manufacturing Sector of Pakistan," PIDE-Working Papers 2014:107, Pakistan Institute of Development Economics.
    2. Zubaida Batool & Attiya Yasmin Javid, 2014. "Dividend Policy and Role of Corporate Governance in Manufacturing Sector of Pakistan," PIDE-Working Papers 2014:109, Pakistan Institute of Development Economics.
    3. Hasan Lubna, 2011. "Rule Of Law, Legal Development And Economic Growth: Perspectives For Pakistan," Journal of Advanced Research in Law and Economics, ASERS Publishing, vol. 0(1), pages 48-59, June.
    4. Javid, Attiya Yasmin & Iqbal, Robina, 2008. "Does Corporate Governance Effects Firm Performance in Case of Pakistani Market," MPRA Paper 37567, University Library of Munich, Germany.

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