This study analyzes the relationship between various corporate governance indicators and the likelihood of financial distress of companies using a sample of 100 firms listed at Pakistan Stock Exchange (PSX). This is achieved by examining the voluntary adoption of corporate governance mechanism of financially distressed and healthy firms over the period of seven years (2009 – 2015) soon after the emergence of global financial crisis in 2007-08. Financial distress of firms is quantified by Zmijewiski Financial Code (ZFC). The link between the corporate governance and financial distress variables is estimated by making use of one-way error component (random effect) model. The findings obtained show that chairman and CEO duality has a positive while shareholder activism imposes negative impact on financial distress. Moreover, the findings add significantly to the existing stream of knowledge and address the gap in the literature of Pakistan. Supervisor:- Abdul Rashid