Impact of Corporate Governance on The Performance of Financial Services Sector: A Case Study of Pakistan Economy
Corporate governance is always considered as an important factor for the performance of any business entity. The present study aims to figure out the impact of governance on performance by using the multiple indicators of corporate governance. The sector used in this study is the financial services sector of Pakistan. Data has been collected from the Securities and Exchange Commission of Pakistan, State Bank of Pakistan and Pakistan Stock Exchange. A panel data analysis of the financial services sector has been done over the period of 2006 to 2017. The estimation techniques are fixed effect and random effect model. The performance indicators used in the study are Return on Assets, Return on Equity and Earning per share whereas corporate governance indicators are Board Size, Number of Meetings, Audit Committee Size and Firm Size obtained from firm’s balance sheet. The findings of our study have shown that board size has a negative but significant impact with return on assets. Whereas the number of meetings, audit committee size and firm size has a positive but insignificant impact on return on assets. Further, in estimating performance through return on equity, it has been found that the number of meetings and firm size has a significant relationship with return on equity. At the end, in estimating performance through earning per share, our results have shown that firm size has a positive and significant impact on earnings per share. The results of our study are important in redefining the strategies for ideal boardroom size in the country and also academically important. Supervisor:- Corporate governance is always considered as an important factor for the performance of any business entity. The present study aims to figure out the impact of governance on performance by using the multiple indicators of corporate governance. The sector used in this study is the financial services sector of Pakistan. Data has been collected from the Securities and Exchange Commission of Pakistan, State Bank of Pakistan and Pakistan Stock Exchange. A panel data analysis of the financial services sector has been done over the period of 2006 to 2017. The estimation techniques are fixed effect and random effect model. The performance indicators used in the study are Return on Assets, Return on Equity and Earning per share whereas corporate governance indicators are Board Size, Number of Meetings, Audit Committee Size and Firm Size obtained from firm’s balance sheet. The findings of our study have shown that board size has a negative but significant impact with return on assets. Whereas the number of meetings, audit committee size and firm size has a positive but insignificant impact on return on assets. Further, in estimating performance through return on equity, it has been found that the number of meetings and firm size has a significant relationship with return on equity. At the end, in estimating performance through earning per share, our results have shown that firm size has a positive and significant impact on earnings per share. The results of our study are important in redefining the strategies for ideal boardroom size in the country and also academically important. Supervisor:- Dr. Ahsan ul Haq Satti
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