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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.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:37567
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    References listed on IDEAS

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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, vol. 6(2), pages 10-61, June.
    2. Waqas Tariq & Imran Ali & Muhammad Ibrahim & Muhammad Asim & Naeem Ur Rehman, 2014. "Theory and Empirical Evidence on Corporate Governance from Banking Sector of Pakistan," Business and Economic Research, Macrothink Institute, vol. 4(1), pages 161-172, June.
    3. 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.
    4. Ghazali Ahmad & Bilal Ahmad Raza, 2017. "Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 13(3), pages 43-65, September.
    5. Hania Rehman & Muhammad Ramzan & Muhammad Zia Ul Haq & Jinsoo Hwang & Kyoung-Bae Kim, 2021. "Risk Management in Corporate Governance Framework," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    6. Talat Afza & Mian Sajid Nazir, 2015. "Role of Institutional Shareholders’ Activism in Enhancing Firm Performance: The Case of Pakistan," Global Business Review, International Management Institute, vol. 16(4), pages 557-570, August.

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    More about this item

    Keywords

    Corporate governance; Tobin’s Q; return on asset; return on equity; agency problem; board size; share holdings; disclosures; leverage;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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