IMPACT OF CORPORATE GOVERNANCE INDEX ON FIRM PERFORMANCE: EVIDENCE FROM PAKISTANI MANUFACTURING SECTOR

Journal of Governance and Regulation

Faisal Javaid¹ 

关键词: Corporate Governance;    Tobin’s Q;    Performance;    ROA;   

DOI  :  10.22495/jgr_v4_i3_c1_p6

学科分类：社会科学、人文和艺术（综合）

来源: Virtus Interpress

【 摘 要 】

Corporate governance is considered to have significant impact on the growth and development perspective of an economy. Sound corporate governance practices leads the economy towards the achievement of higher performance, provide sources for capital investment by increasing the creditability of shareholders. The purpose of this study is to empirically investigate the relationship of corporate governance and firm performance in terms of accounting as well as market performance i.e.to be measured by Return on asset, Return on equity and Tobin’s Q. The theoretical base to conduct the study is the demand of separation of ownership and control characterize as agency theory. The previous studies have yielded inconsistent result. To achieve the purpose 58 textile sector companies were selected listed in the Karachi stock exchange and data was taken from annual reports of the companies for the period of 2009 to 2013. Descriptive statistics, correlation analysis and regression estimation using pooled, fixed effect, random effect and Hausman specification test were carried out after developing a composite index based on 21 proxies. The result entails that corporate governance index (CGI) and firm performance has positive and significant association but the relationship for each specific index is dependent upon the measure of firm performance. The result also shows that companies having strong corporate governance mechanism has greater chances to acquire finance. The implication of study demands that the reform effort should be directed towards the improvement in internal corporate governance mechanism and regulatory framework for the governance system.

【 授权许可】

CC BY-NC