Corporate Governance Practices and Firm Performance:Evidence from Karachi Stock Exchange
Abstract
Good governance is the building block of any organization for long-lasting relationship with its stakeholders. Corporations with better governance practices, attracted more investment flows in global dynamic markets and stays ahead of their competitors. Now a day’s best business practices and corporate social responsibilities are considered as a double edge sword for corporations. The more you adopt these practices the more you can enhance your economic performance. This paper sheds light on the structural relationship between corporate governance and firm performance of twenty-five firms listed at Karachi Stock Exchange for the year 2011-2014. The study is based on the impact of corporate governance mechanisms (Board Size, Log of Sales) on firm performance (Return on Assets and Total Assets Turn over (TAO.) The outcomes provide proof of a positive relationship between Log of Sales and total assets turn over, while shows a negative relationship between Log of sales and return on assets. There is a significant however negative relation between board size and total assets turn over. This study implies that board size should be perfectly matched in term of executives and non-executives’ directors’ to improve firm value in the long run.
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