The Impact of Corporate Governance on Firm Performance: empirical study on Pakistan's Cement Industry

Abstract

This study examines the impact of corporate governance mechanisms on firm performance within Pakistan's cement industry. The research focuses on 16 listed cement companies on the Pakistan Stock Exchange (PSX) over the period 2019–2024. Key governance variables such as CEO duality, board independence, ownership concentration, and board structure were analysed to assess their influence on firm performance, measured through accounting and market-based indicators like Tobin’s Q. Using panel data techniques, the study applies Feasible Generalized Least Squares (FGLS) with robust standard errors to address heteroskedasticity and employs the Random Effects model. First, CEO ownership and board ownership positively affect firm performance. Secondly, It was found that CEO duality and an increasing independent board are negatively correlated. Thirdly, no significant relationship was observed between firm size and sales. Fourth, the results emphasize the role of ownership structure in improving firm performance while recommending that governance reforms seek to balance family ownership with board control to improve corporate results in the cement industry in Pakistan.