Corporate Governance and Firm Performance: Evidence From Listed Firms of Pakistan

Abstract

This study aims to find the influence of corporate governance on firm performance for the listed non-financial firms on the Pakistan Stock Exchange (PSX) for the period 2005-15. The article has measured corporate governance by the large boards with more independent directors, independence of audit committee, ownership concentration, non-existence ofCEOduality, and presence of foreign and institutional investors. To address this endogenous nature of institutional ownership and performance in this study we have used instrumental variables (IV) techniques using a two-stage least square (2SLS) by instrumentalizing institutional ownership with firm size and firm age. The study found that firms with large and independent boards outperform their counterparts. Similarly, the study found that firms having the joint position ofCEOand chairperson performs lower than counterparts. In Pakistan firms with foreign and institutional owners better than others. We found that firms with concentrated owners have a lower level of agency problem and ultimately perform well. Furthermore, we found that firms with a lower level of agency problem type II (measured via ownership concentration contestability) perform better in Pakistan.

An empirical investigation of firm performance through corporate governance and information technology investment with mediating role of corporate social responsibility: Evidence from Saudi Arabia telecommunication sector

“…It has been demonstrated that various forms of governance can have an effect on social duties. This assertion is supported by Ali et al (2021) , who cite several studies which demonstrate that the board of directors has the greatest influence on the performance of CSR programs. The capacity of an organization to effectively manage its relationships with its many stakeholders has a substantial bearing on the success of the organization.…”

“…In place of concentrating on a select few indicators, several research opt to make use of a composite measure of corporate governance. Ali et al (2021) created an indicator of governance in their respective studies (G-index). Because there has been a significant amount of research conducted on this topic, we will begin by conducting a literature review on the pertinent topics and then zeroing in on the connection that exists between corporate governance metrics and the level of success achieved by companies.…”

Are owners chalk and cheese in the context of dividend smoothing asymmetry?

“…Therefore they are less concernced with dividend cuts and omissions rather they are more concern with long term survival of the firm. The results are parallel to Ali et al (2021).…”

Globalizing the Boardroom among Family-Controlled Companies on Bursa Malaysia: The effects of corporate governance on firm performance

“…Research by Bekiaris (2021) stated that foreign directors could lead to less effective monitors. Foreign directors may also be less effective on corporate boards due to their physical, cultural, and language differences (Ali et al, 2021). On the other hand, foreign directors possess the foreign experience to improve firm performance (Ali et al, 2021).…”

“…Foreign directors may also be less effective on corporate boards due to their physical, cultural, and language differences (Ali et al, 2021). On the other hand, foreign directors possess the foreign experience to improve firm performance (Ali et al, 2021). All the empirical results on the impact of foreign directors' appointments on a firm's performance were inconsistent.…”