Northampton Electronic Collection of Theses and Research

The relationship between Corporate Governance and Firm Financial Performance: An Empirical Investigation of an emerging market

Farquhar, S. and Amin, Q. (2021) The relationship between Corporate Governance and Firm Financial Performance: An Empirical Investigation of an emerging market. International Journal of Business Governance and Ethics. 15(2) 1741-802X.

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Abstract:
We investigate whether the distinct nature of Multinational firms (MNC) differently influence the governance-performance relationship compared to the local firms in Pakistan. We used a dynamic system GMM estimator that produces consistent and efficient estimation after controlling for dynamic endogeneity and simultaneity. Our results demonstrate that corporate governance (CG) has a significant positive impact on firm financial performance whilst CG practice of MNC firms is more effective than local firms in Pakistan. We observed two distinct financing behaviours i.e. ‘pro-active investment behaviour’ of MNC firms and ‘conservative investment behaviour’ of local firms. We conclude that a well-established corporate culture, significant financial worth and firms’ higher growth rate are key determinants of better CG practice.
Uncontrolled Keywords:
Corporate governance, Firm performance, Endogeneity, System GMM
Creators:
Farquhar, S. and Amin, Q.
Faculties, Divisions and Institutes:
Faculties > Faculty of Business & Law > Accounting & Finance
Date:
2 April 2021
Date Type:
Publication
Journal or Publication Title:
International Journal of Business Governance and Ethics
Volume:
15
Number:
2
Language:
English
DOI:
10.1504/IJBGE.2020.10030780
ISSN:
1741-802X
Status:
Published / Disseminated
Refereed:
Yes
Related URLs:
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