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 such as ‘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.
|Number of pages||32|
|Journal||International Journal of Business Governance and Ethics|
|Publication status||Accepted/In press - 25 Feb 2020|
- corporate governance
- firm performance; endogeneity
- system GMM
Amin, Q. A., & Farquhar, S. (Accepted/In press). The relationship between corporate governance and firm financial performance: An empirical investigation of an emerging market. International Journal of Business Governance and Ethics, 15(4), (In-Press). https://doi.org/10.1504/IJBGE.2020.10030780