This study aims to inquire the area of corporate governance by identifying the role of institutional, foreign and government ownership in financing choices and performance of firms listed on Karachi Stock Exchange (KSE) Pakistan. Data of 100 non financial firms for the period of 2003 to 2011 has been used. This study shows that foreign ownership and government ownership enhance the firm performance as compared to the institutional shareholders. Institutional owners and foreign investors both influence financing choice taken by firm, but in opposite direction. Institutional investors use debt as monitoring device. With all other control variables financial reporting quality is also considered. This study implies that Pakistani market discourages the use of leverage. Institutional owners prefer high leverage as compared to foreign ownership. Institutional investor’s high preference is to lower the monitoring cost while foreign investors’ aim is to reduce bankruptcy cost. So, management should pay high attention to set optimal capital structure. Supervisor:- Dr Irshad Hassan