The relationship between corporate governance and firm financial performance: An empirical investigation of an emerging market

Qazi Awais Amin, Stuart Farquhar

Research output: Contribution to journalArticle

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 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.
Original languageEnglish
Pages (from-to)(In-Press)
Number of pages32
JournalInternational Journal of Business Governance and Ethics
Volume15
Issue number4
DOIs
Publication statusAccepted/In press - 25 Feb 2020

Keywords

  • corporate governance
  • firm performance; endogeneity
  • system GMM

Fingerprint Dive into the research topics of 'The relationship between corporate governance and firm financial performance: An empirical investigation of an emerging market'. Together they form a unique fingerprint.

  • Cite this