CORPORATE GOVERNANCE AND FIRM PERFORMANCE: AUTOMOBILE ASSEMBLERS LISTED IN PAKISTAN STOCK EXCHANGE (PSX)
Keywords:
Corporate Governance, Performance Management (PM), CEO Duality, Annual General Meeting (AGM), Return on Equity (ROE)
Abstract
The purpose of this study is to analyze the relationship between (PM and ROE) and the corporate governance mechanisms (BS, AC, CEOD, AGM) on automobile listed firms in Pakistan Stock Exchange. Data has been examined from 2010 to 2016. Multiple Regression analysis and t-test have been applied to examine the impact of corporate governance on firm performance. The results show that Board size, Audit Committee Size and number of meetings are much adequate to show positive impact on firm performance; whereas near to 70%, CEOs hold dual positions in automobile organizations; which gives a negative sign on firm performance. Regression analysis show a positive relationship with the dependent variables (PM, ROE) and also on independent variables(BS, AC, CEOD, AGM). Results also conclude a negative relationship between performance measures (PM and ROE) with corporate Governance Mechanisms (BS, AC,CEOD, AGM). The proposition of the results states that CEO dual status should not be used; single position should be held by an individual especially for the top level positions like CEO.
References
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and corporate governance: the role of the board and the audit
committee. Journal of corporate finance, 9(3), 295-316.
Yasser, Q. R., Entebang, H., & Mansor, S. A. (2011, July). Corporate
Governance and Firm Performance in Pakistan: The Case of
Karachi Stock Exchange ( KSE-30). Journal of Economics and
International Finance, 3(8), 482-491.
board size and composition on bank efficiency. International
Journal of Banking, Accounting, and Finance, 2(4), 357-386.
Ahmed, D. R., & Din, D. I. (2013). Failure of Corporate Governance in
Pakistan Railways. International Journal of Multidisciplinary
Sciences and Engineering, 4(5), 48-49.
Apostolides, N. (2007). Directors versus shareholders: Evaluating
corporate governance in the UK using the AGM
scorecard. Corporate Governance: An International Review, 15(6), 1277-1287.
Apostolides, N. (2010). Exercising corporate governance at the annual
general meeting. Corporate Governance: The international
journal of business in society, 10(2), 140-149.
Boubaker, S., & Nguyen, D. K. (2015). Corporate Governance and
Corporate Social Responsibility: Emerging Markets Focus.
Singapore: World Scientific Publishing Co. Pte. Ltd. Retrieved
from http://EconPapers.repec.org/RePEc:wsi:wsbook:8869.
Coffee Jr, J. C. (2005). A theory of corporate scandals: Why the USA and
Europe differ. Oxford review of economic policy, 21(2), 198-211.
Dar, L. A., Naseem, M. A., Rehman, R. U., & Niazi, D. G. (2011).
Corporate Governance and Firm Performance a Case Study of
Pakistan Oil and Gas Companies Listed in Karachi Stock
Exchange. Global Journal of Management and Business Research, 11(8), 1-11.
DeZoort, F. T., & Salterio, S. E. (2001). The effects of corporate
governance experience and financial-reporting and audit
knowledge on audit committee members’ judgments. Auditing:
A Journal of Practice & Theory, 20(2), 31-47.
Elsayed, K. (2007). Does CEO duality really affect corporate
performance?. Corporate Governance: An International
Review, 15(6), 1203-1214. doi:10.1111/j.1467-8683.2007.00641.x Ghani, W. I., & Ashraf, J. (2005). Corporate Governance, Business Group
Affiliation, and Firm Performance: Descriptive Evidence from
Pakistan. Centre for Management and Economic Research, 5(35), 26.
Gill, M. S., Vijay, T. S., & Jha, S. (2009). Corporate governance
mechanisms and firm performance: a survey of literature. IUP
Journal of Corporate Governance, 8(1), 7-21.
Hasan, A., & Butt, S. A. (2009). Impact of Ownership Structure and
Corporate Governance on Capital Structure of Pakistani Listed
Companies. International Journal of Business and Management, 2(4), 50-57.
Holmstrom, B., & Kaplan, S. N. (2003). The State of US Corporate
Governance: What’s right and what’s wrong?. Journal of Applied
Corporate Finance, 15(3), 8-20.
IFC, International Finance Corporation. (2013). Corporate governance
methodology/Corporate governance tools. Retrieved from:
http://www1.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_Ex
ternal_ Corporate_Site/Corporate+Governance/Investments/Tools/
Javaid, A. Y., & Iqbal, R. (2010). Corporate Governance in Pakistan:
Corporate Valuation, Ownership, and Financing. Pakistan
Institute of Development Economics (PIDE) Working Papers and Research Reports, 1-81.
Lipton, M., & Lorsch, J. W. (1992). A Modest Proposal for Improved
Corporate Governance. The Business Lawyer, 48(1), 59-77.
Lipton, M., & Rosenblum, S. A. (1991). A new system of corporate
governance: The quinquennial election of directors. The
University of Chicago Law Review, 58(1), 187-253.
Lubale, G. (2012). An Introduction to the County Governments of Kenya.
Nairobi; Jomo Kenyatta University of Agriculture and Technology.
Mangi, R. A., & Siddiqui, K. (2013). Privatization of PTCL: Corporate Governance Failure.
The IUP Journal of Corporate Governance, 12(4), 30-35
Mohamad, Z. Z., & Chek, I. T. (2011). Corporate Governance Failure and
its Impact on Financial Reporting Within Selected Companies.
International Journal of Business and Social Science, 2(21),205-213.
Mitchell, L. E. (1990). The fairness rights of corporate bondholders. NYUL Rev., 65, 1165.
Parker, S., Peters, G. F., & Turetsky, H. F. (2002). Corporate governance
and corporate failure: a survival analysis. Corporate Governance:
The international journal of business in society, 2(2), 4-12.
Peng, M. W., Zhang, S., & Li, X. (2007). CEO Duality and Firm
Performance during China’s Institutional Transitions.
Management and Organization Review, 3(2), 205-225. doi:
10.1111/j.1740-8784.2007.00069.x
Salman, F., & Siddiqui, K. (2013). Mehrangate Scandal: Corporate
Governance Failure. IUP Journal of Corporate
Governance, 12(4), 41-46.
Sheikh, A. N., & Wang, Z. (2012). Effects Of Corporate Governance on
Capital Structure: Empirical Evidence from Pakistan. Corporate
Governance: The International Journal of Business in
Society, 12(5), 629-641.
Siddiqui, K., & Anjam, M., (2013). Privatization of MCB: Corporate
Governance Failure, The IUP Journal of Corporate Governance,
Special Issue on “Corporate Governance in Pakistan”, 12 (4), 36-40
Siddiqui, K., & Fahim, S. M. (2013). Khanani and Kalia International:
Corporate Governance Failure. IUP Journal of Corporate Governance, 12(4), 52-57
Tesco. (2006). Annual Review and Summary Financial Statement 2006. Cheshunt, UK: Tesco.
UNESCO. (2016). Education. Retrieved from http://www.unesco.org/new/
en/education/themes/strengthening-educationsystems/ qualityframework/
technical-notes/concept-of-governance/
Xie, B., Davidson, W. N., & DaDalt, P. J. (2003). Earnings management
and corporate governance: the role of the board and the audit
committee. Journal of corporate finance, 9(3), 295-316.
Yasser, Q. R., Entebang, H., & Mansor, S. A. (2011, July). Corporate
Governance and Firm Performance in Pakistan: The Case of
Karachi Stock Exchange ( KSE-30). Journal of Economics and
International Finance, 3(8), 482-491.
Published
2017-12-15
How to Cite
Ansari, B., Gul, K., & Ahmad, N. (2017). CORPORATE GOVERNANCE AND FIRM PERFORMANCE: AUTOMOBILE ASSEMBLERS LISTED IN PAKISTAN STOCK EXCHANGE (PSX). Journal of Business Strategies, 11(2), 125-140. Retrieved from http://greenwichjournals.com/index.php/businessstudies/article/view/381
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