Impact of Board of Directors on Financial Distress in Baking Sector of Pakistan

Abstract

The study is based on the impact of board of directors and its attributes on financial distress in context of banking sector of Pakistan. In this research, the impacts of board of director are investigated through attributes of board of directors which are board size, CEO duality, Independent and dependent directors and female directors. The Financial distress in this study is measured by using Altman Z-score model. Data for the study is collected from Annual reports of banks and State Bank of Pakistan. The sample size taken in this study is twelve conventional banks. The findings through analysis of the data indicated that board of directors has significant and insignificant impact on the FD in banking sector of Pakistan. There is marginal & positive significance between board of director attributes (board size & outside directors) and FD whereas, other attributes like, dependent directors and female directors are resulted in moderately positive significant to Financial Distress. CEO duality is highly and positively significant to financial distress