Corporate Governance in Pakistan and Need of Corporate Performance Measurement: An Empirical Study

Abstract

This research examines the impact of corporate governance on the performance of firms in Pakistan. Corporate governance revolves around the basic principles of fairness, transparency and accountability. The term Corporate Governance is used to describe a process, which has been practiced for as long as there have been corporate entities. Corporate governance is critical to improving economic efficiency and growth. It serves as a deterrent to mismanagement and infuses discipline in the decision making process of boards of directors. A number of surveys of investors in Europe and the US show that investors eventually reduce their investments in a company that practices poor governance. Controlling for initial conditions and sector-specific effects and using several measures of enterprise performance. Since the monitoring of the compliance of the financial aspect of the Code is being done by more than one institution, companies usually end up following it, as Securities and Exchange Commission of Pakistan (SECP) has not introduced any proper institution to check companies’ compliance with the non financial aspect of the code, and there is no proper tool in place to gauge if the companies are really complying with it, companies’ compliance with the non financial aspect of the code usually remains on paper only, and Code of Corporate Governance has no direct effect on companies performance.

Keywords: Corporate Governance, Corporate Performance Measurement, Balanced Scorecard.