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Corporate Governance, Firm Attributes and Financial Performance: Evidence from Pakistan
Abstract
This study aims to investigate the well-established governance-performance relationship for a sample of 201Pakistan Stock Exchange (PSX) listed firms over the period of 2010-2018 in the context of an important firm characteristics i.e. firm size. Sample firms categorized into small and large size based on total assets. Firm performance measures through ROA, ROE, and Tobin’s Q. Panel econometrics techniques namely fixed effect model and random effect model applied to bridge the relationship between CG and firm performance after confounding effects of firm size, leverage, and firm age. Large firms have higher profit which endorses the size effects benefits enjoying by big firms than smaller firms. Furthermore, large firms better implemented the governance code than small firms. Overall CG remains significant towards accounting return (ROA) and market measures (Tobin’s Q) but remains valueless in terms of return on equity (ROE). In the perspective of firm size, larger firms got enriched with higher profit through better implementation of governance mechanism than smaller firms which remains deprived from this values enhancing effect of corporate governance. Results suggest to strengthen the governance mechanism in smaller firms too, to reap the benefits of CG in terms of higher profitability
Authors
Dr. Amna Noor
Assistant Professor, School of Business Management and Administrative Sciences, The Islamia University of Bahawalpur, Bahawalpur-Pakistan
Muhammad Farooq
PhD student in Finance, School of Business Management and Administrative Sciences, The Islamia University of Bahawalpur, Bahawalpur-Pakistan
Kiran Farooq
Institute of Business and health Management, Dow University, Karachi -Pakistan
