Relationship of Corporate Governance and Firm Performance: Investigation from Textile Sector of Pakistan

Abstract :

This paper investigates the relationship between corporate governance and firm performances with evidence from top 10 listed textile companies on Pakistan Stock Exchange. Three important corporate governance mechanisms (board size, board composition, and audit committee composition) and two performance measures (return on assets and net profit ratio) are used to investigate the relationship. The finding from our study concluded that there is no direct relationship between any of the three corporate governance variables (board size, board composition, and audit committee composition) on either of the two performance variables (return on assets and net profit ratio). These results are consistent with findings of many previous studies conducted in developing countries. Future studies can investigate different industries and compare the results with this paper.