Perceived Effect of Shareholders on Corporate Governance

Muhammad, Bashir; Hayat, Yousaf; Iqbal, Malik Manzoor; Khan, Sher

doi:10.2139/ssrn.2737853

Cited by 3 publications

(3 citation statements)

References 57 publications

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“…The AGMs show a negative and significant relationship, demonstrating that the board of directors (executive or non-executive) express non-serious attitude toward attending the AGMs. Thus, they play less role in enhancing the profitability (Muhammad et al, 2016). The positive significant impact of financial transparency shows the stronger the rating, the better the bank's performance.…”

Section: Hausman Test For Model Specification (Fixed Effects Vs Random Effects)mentioning

confidence: 99%

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

Sohail

Rasul

Fatima

2017

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Purpose The purpose of this study is to explore how governance mechanisms (internal and external) enhance the performance of the return on asset (ROA), return on equity (ROE), earning per share (EPS) and dividend payout ratios (DP) of the banks of Pakistan. The study incorporates not only the internal factors of governance (board size, out-ratio, annual general meeting, managerial ownership, institutional ownership, block holder stock ownership and financial transparency) but also the external factors (legal infrastructure and protection of minority shareholders, and the market for corporate control). Design/methodology/approach The sample size of the study consists of 30 banks (public, private and specialized) listed at the Pakistan Stock Exchange (PSE) for the period 2008-2014. The panel data techniques (fixed or random effect model) have been used for the empirical analysis after verification by Hausman (1978) test. Findings The results revealed that not only do the internal mechanisms of governance enhance the performance of the banking sector of Pakistan but external governance also plays a substantial role in enriching the performance. The findings conclude that for a good governance structure, both internal and external mechanisms are equally important, to accelerate the performance of the banking sector. Research limitations/implications Internal and external mechanisms of corporate governance can also be checked by adding some more variables (ownership i.e. foreign, female and family as internal and auditor as external), but they are not added in this work due to data unavailability. Practical implications The study contributes to the literature and could be useful for the policy makers who need to force banks to mandate codes of governance through which they can create an efficient board structure and augment the performance. The investments from different forms of ownership can be accelerated if they follow the codes properly. Social implications The study facilitates the bankers in incorporating sound codes of corporate governance to enhance the performance of the banks. Originality/value This work is unique as no one has explored the impact of external mechanism of governance on the performance of the banking sector of Pakistan.

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Section: Hausman Test For Model Specification (Fixed Effects Vs Random Effects)mentioning

confidence: 99%

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

Sohail

Rasul

Fatima

2017

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“…Annual general meeting (AGM) is a good measure of CG. AGM has negative significant relationship with CG [19]. Meanwhile, AGM has insignificant relationship with the performance [20].…”

Section: Review Of Literaturementioning

confidence: 99%

Internal Corporate Governance and Financial Performance Nexus; a Case of Banks of Pakistan

Bashir¹

2018

JFA

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The persistence of corporate governance (CG) is to expedite operative and cautious management which can transport the enduring success of the company. The performance of any firm or bank is vibrantly enhanced by corporate governance. The key contribution of this study to governance literature is that; it demonstrates how the presence of the internal governance mechanism influence the bank performance. The study makes an attempt to measure the impact of internal governance indicators (Board Structure and Ownership Structure) on the financial performance (Return on Equity, Return on Assets and Earning Per Share) of the banks of Pakistan under the presence of control variables (leverage and size). The selected sample consist of 30 banks (public, private and specialized), which are listed at Pakistan Stock Exchange (PSE) for the period 2008-2014. The study takes 30 banks listed in PSE, formerly KSE and, check how corporate governance impact on all the listed banks at PSE, irrespective of their nature of operation. Study also extended the time frame till 2014. The study comprises of three models. The regression analysis results reveal that the majority of the internal governance indicators of Model 2 and 3 show significant relationship with ROE and EPS whereas, majority of the internal governance indicators of Model 1 depict insignificant relationship with ROA. The results depict that in a developing country like Pakistan there are sound codes of corporate governance but, their proper implementation is missing.

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“…Independent directors have negative relationship with firm performance (Agrawal, A., & Knoeber, C. R. 1996). Annual general meeting (AGM) has negative significant relationship with corporate governance (Muhammad, B., Hayat, Y., Iqbal, M. M., & Khan, S. 2016). Whereas, there is insignificant relationship between AGM and firm performance (Dar, L., Naseem, M…”

Section: Board Structurementioning

confidence: 99%

Corporate Governance and Firm Performance Nexus: A Case of Cement Industry of Pakistan

2018

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Corporate governance is the system of rules, practices and method by that business corporations are directed and controlled. The aim of this research is to examine the impact of the corporate governance on the financial performance of the enlisted cement industry on the Pakistan Stock Exchange from the year 2013-17. This research is a â€œquantitative researchâ€ which focuses on numbers and results based on empirical analysis of actual data and logic. Ten out of seventeen cement firms listed at PSX from the period 2013-17 are selected as sample of the study. Data was collected from documents and records. Descriptive statistics, Pearsonâ€™s correlation and multiple regressions were used for data analysis. The results showed that there is no significant relationship between leverage and firm performance, the board structure has no significant relationship with firm performance, and firm size has an insignificant relationship with firm performance. The results however suggested that ownership structure has significant relationship with firm performance. The future investors in cement industry of Pakistan must consider above factors before investments. This study helps shareholders and management in decision making about the effect of ownership structure on firm performance and how these can change ownership structure. This study helps students to gain knowledge and understanding about good corporate governance and its impact on firm performance. It will also help them to go through the annual reports of companies and to analyse the financial statements so that they could learn how to analyse the performance of the firm in terms of ROE. Moreover, the study would also be a direction for future researchers and students to further add value to the subject of corporate governance and firm performance.

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Perceived Effect of Shareholders on Corporate Governance

Cited by 3 publications

References 57 publications

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

Internal Corporate Governance and Financial Performance Nexus; a Case of Banks of Pakistan

Corporate Governance and Firm Performance Nexus: A Case of Cement Industry of Pakistan

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