Corporate Governance and Corporate Financing Decisions Impact on Firm Performance a Cement Industry Perspective of Pakistan

Muhammad Ashraf, Tayyeba Iqbal, Sidra Tariq

Abstract


This paper empirically examines the impact of corporate governance and corporate financing decisions on the performance of cement industry of Pakistan. Multiple regression analysis is used in estimating the impact of corporate governance and corporate financing decisions on firm performance measures such as return on assets (ROA), return on equity (ROE), earning per share (EPS) and net profit margin (NPM) by using sample of 19 cement industry listed in Karachi Stock Exchange (KSE) for the  period 2006-2016 and E-views technique used to apply the correlation and regression analysis. The data are collected from annual reports of cement industry of Pakistan. The results of this study indicate that firm with larger board size (BS) and managerial ownership (MO) leads higher return on assets (ROA). CEO duality (CD), firm size (FS), short term debt ratio (STDR) and debt equity ratio (DER) negatively influence the return on equity (ROE). Larger firm size, long term debt (LTD), dividend policy (DP) positively influence the earning per share (EPS) and net profit margin (NPM). In short these results indicate that corporate governance and corporate financing decision impact the performance of cement industry of Pakistan.

The result of this study may be helpful for investors, financial management consultants, financial managers and overall management of the company to understand the effect of board size, CEO duality, managerial ownership, board meeting, firm size, capital structure, debt maturity structure and dividend policy on the performance of firms. This study add value to the literature by exploring the impact of corporate governance and corporate financing decisions and on the factors that have impact on firm performance.


Keywords


Corporate Governance; Corporate Financing Decisions; Firm Performance; Karachi Stock Exchange; Pakistan.

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