Abstract:
Corporate Governance has become a major concern for investors these days as the
companies having good governance practices are less likely to face uncertain jitters and
they also continue to perform effectively in the best interest of stakeholders. The concept
of corporate governance can be utilized to a great extent in making Pakistan a viable
option for the investors to make capital investments and earn long term gains while, also
enabling Pakistani firms to raise long term capital through raising their governance
standards.
This study determines the relationship between corporate governance and an
organization’s profitability while taking the examples of listed companies of the Karachi
Stock Exchange (KSE-100 index) in particular. The research would help the investors
and investment analysts in making timely investment decisions while it would also help
entrepreneurs, businessmen and the financial sector of Pakistan as a whole to learn the
importance of Corporate Governance. This research addresses the stakeholders with
significant findings on the impact of corporate Governance on a firm’s profitability.
The research examines as to what extent the Corporate Governance affects a company’s
performance in terms of its return on equity (ROE) while; the level of corporate
governance level is determined by its three variables (Board of Directors, Chief
Operating Officer-Duality and Disclosure/Transparency). A sample of 11 companies
from oil and gas sector.
Firstly, a detailed analysis of the literature review has been conducted to learn the
importance of corporate governance factors in influencing the profitability of a company
and after which we have examined the association of these determinants through carrying
a descriptive statistics analysis, con-elation and multiple regression analysis.
