IMPACT OF CORPORATE GOVERNANCE PRACTICES ON FINANCIAL PERFORMANCEOF AUTOMOBILE FIRMS IN PAKISTAN

Abstract

Purpose: This study has performed with an objective to determine the impact of corporate governance practices including disclosure transparency, executive compensation, relationship with shareholders and board of director of automobile firms in determination of return on assets & return on equity ofthe Pakistan. Methodology & Design: This research study is quantitative in approach following numerical interpretation. In addition, this research study is secondary in nature as instant data on selected set of variable in case of Pakistan are available in annual reports. Furthermore, this study has adopted with explanatory research approach to explain the impact of board of director, relationship with shareholders, executive compensation and disclosure on firm’ financial performance i.e. return on assets & return on equity. This study is focused on automobile industry in Pakistan to investigate the impact of corporate governance practices on firm’s financial performance. This study used with regression technique to determine the impact of disclosure transparency, executive compensation, relationship with shareholders and board of director on return on assets & return on equity. Findings: It has found through this study that there is a significant impact of disclosure transparency, relationship with shareholders and board of director In this context, board of directors and disclosure have found relatively higher impact on firm’s return on assets as compare to other factors. Furthermore, only board of director score has only found with significant impact in determination ofreturn on equity Limitations: Time, knowledge to techniques, financial and human resource factors have found critical factor to limitations of current study. Recommendations: It is good to apply with better disclosure practices, relationship development with shareholders, executive composition and board of director structuring to determine its optimum impact on return on assets of listed firms in automobile industry.