Impact of Corporate Governance on Over Investment KSE-100 Index

Abstract

We have done this research to check the impact of Corporate Governance on Over Investments KSE-100 Index. Corporate Governance variables which are used in this research are managerial ownership, institutional ownership, board size, CEO Duality, Over Investment and Independent Audit Committee. The data is extracted from the official website of Karachi Stock Exchange. Data for 100 companies listed on KSE Karachi Stock Exchange is used for a time span of 6 years from 2014-2019. Before the regression some hypotheses were developed. A hypothesis was developed that corporate governance variables like CEO Duality, Board Size, Institutional Ownership, Managerial Ownership, and Independent Audit Committee have a significant relationship with over investment. However, this hypothesis was not proven right in our case. After performing the regression analysis on STATA, the results showed that there is a significant and negative relationship of independent audit committee with over investment. Only audit committee has had a significant relationship with over investment whereas all other variables don’t have a significant relationship with each other. Further results have shown that corporate governance variables like Managerial Ownership or Institutional Ownership have been significantly increasing followed by an increase in over investment. However, the variable of CEO Duality had a negative impact in Pakistan. But generally, it does not have a negative relationship