Corporate Governance: Corporate Governance and Firm's Performance

Corporate governance has significant importance in both the developed and developing economies due to the fact that good corporate governance can enhance economic growth and lead to the improved firm?s performance. Countries have experienced healthy growth rate in corporate sectors which have implemented a sound system of corporate governance. Furthermore, firms in these countries have attracted a huge amount of capital from investors in the market. Corporate governance improves the value of a firm, as the sound corporate governance framework forces directors and managers to maximize the shareholder?s value. The main objective of the study is to find the relationship between corporate governance instruments and firm?s performance in Pakistan. The study is based on the financial market of Pakistan. The data is collected for companies listed on Karachi Stock Exchange (KSE). Fifty companies for the period of 2004 to 2008 are selected from all the sectors of the economy for analysis. The data for variables is collected from annual reports and is cross checked from KSE report. Regression analysis is used to test the hypotheses of the study.