A The Impact of Corporate Governance on the Financial Distress: Evidencefrom Pakistani Listed Companies

Authors

  • AHMED HASSAN JAMAL AHMED HASSAN JAMAL CUST Author
  • SYED ZULFIQAR ALI SHAH Author

Keywords:

This study intends to assess how corporate governance affects the financial distress in non-financial listed companies in Pakistan. Sample of 53 companies was obtained from non-financial institutes listed in Pakistani stock exchange. Regression analysis is used to estimate the impact of explanatory variables including size of board, composition of board, audit committee independence and duality of CEO on the financial distress. The findings show that size of board, composition of board and CEO duality has a positive impact on Z-score of Pakistani listed firms. This implies that better the corporate governance practices in companies, lower will be the financial distress and vice versa.

Abstract

This study aims to assess how corporate governance affects financial distress in non-financial listed companies in Pakistan. A sample of 53 companies was drawn from non-financial firms listed on the Pakistani stock exchange. Regression analysis was employed to estimate the impact of explanatory variables, including board size, board composition, audit committee independence, and CEO duality, on financial distress. The findings indicate that board size, board composition, and CEO duality have a positive impact on the Z-score of Pakistani listed firms. This suggests that stronger corporate governance practices are associated with lower financial distress, and conversely, weaker governance practices may increase financial distress.

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Published

2017-07-01

Issue

Vol. 5 No. 2 (2017): Issue 2 volum 5 july 2017

Section

Articles