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Does Corporate Governance Effects Firm Performance in Case of Pakistani Market

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  • Javid, Attiya Yasmin
  • Iqbal, Robina

Abstract

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

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37567.

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Date of creation: 2008
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Publication status: Published in NUST Journal of Business and Economics 1.1(2008): pp. 11-23
Handle: RePEc:pra:mprapa:37567

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Related research

Keywords: Corporate governance; Tobin’s Q; return on asset; return on equity; agency problem; board size; share holdings; disclosures; leverage;

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Cited by:
  1. Kashif Rashid & Seep Nadeem, 2014. "The Role of Ownership Concentration, its Types and Firm Performance: A Quantitative Study of Financial Sector in Pakistan," Oeconomics of Knowledge, Saphira Publishing House, Saphira Publishing House, vol. 6(2), pages 10-61, June.
  2. Din, Shahab-u- & Javid, Attiya Yasmin, 2011. "Impact of managerial ownership on financial policies and the firm’s performance: evidence Pakistani manufacturing firms," MPRA Paper 37560, University Library of Munich, Germany.

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