Does compliance with corporate governance increase profitability? Evidence from an emerging economy: Pakistan

Document Type

Journal Article

Publication Title

Global Finance Journal

Volume

53

Publisher

Elsevier

School

School of Business and Law

RAS ID

44756

Comments

Shakri, I. H., Yong, J., & Xiang, E. (2022). Does compliance with corporate governance increase profitability? Evidence from an emerging economy: Pakistan. Global Finance Journal, 100716. https://doi.org/10.1016/j.gfj.2022.100716

Abstract

Corporate governance reforms have evolved over time, but few studies have addressed firm compliance with corporate governance standards in the context of an emerging market like Pakistan. We build a Corporate Governance Compliance Index for public firms in Pakistan for 2008–2018. Our index consists of six subindices based on the key parameters of governance outlined by the Code of Corporate Governance of Pakistan. Our analysis shows that increased compliance predicts higher firm performance but entails greater compliance costs. Board Structure and Functions & Responsibilities of Audit Committee drive the compliance-performance relationship, which is affected by levels of managerial ownership and ownership concentration.

DOI

10.1016/j.gfj.2022.100716

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Link to publisher version (DOI)

10.1016/j.gfj.2022.100716