Corporate Governance and Firm Performance: The Role of Transparency & Disclosure in Banking Sector of Pakistan

15 Pages Posted: 16 Nov 2014

See all articles by Rashid Zaman

Rashid Zaman

Lincoln University New Zealand

Muhammad Arslan

Bahria University Alumnus; Lincoln University (NZ)

Muhammad Sidiqui

Bahria University

Date Written: November 14, 2014

Abstract

Purpose: The purpose of this paper is to empirically examine the relationship between transparency and disclosure and firm performance. Highlighting the importance of corporate governance in banking sector, the paper has focused in depth over its role, level and its impact on performance in banking industry of Pakistan.

Design/methodology/approach: The paper access this purpose by constructing transparency and disclosure index for the past five year 2007-2011, using proxies for three sub-categories which are board and management structure disclosure, ownership structure disclosure and financial transparency disclosure. The paper also investigated structural changes of T&D Index and its effect on bank financial performance over the sample of 30 banks operating in Pakistan.

Findings: Empirical analysis results by using ordinary least square regression model, reveals that financial performance is positively related to the transparency and disclosure and their sub levels except ownership structure disclosure which has negative relation with both ROA and ROE. Furthermore the average T&D level in Pakistani banking sector is above average.

Practical implications: The current research paper aims for important policy implementation to reduce information asymmetry and improve corporate governance and firm performance in banking sector of Pakistan.

Keywords: Corporate Governance; Transparency & Disclosure; Financial Performance; Agency Theory

Suggested Citation

Zaman, Rashid and Arslan, Muhammad and Sidiqui, Muhammad, Corporate Governance and Firm Performance: The Role of Transparency & Disclosure in Banking Sector of Pakistan (November 14, 2014). Available at SSRN: https://ssrn.com/abstract=2524475 or http://dx.doi.org/10.2139/ssrn.2524475

Rashid Zaman

Lincoln University New Zealand ( email )

Ellesmere Jct Rd, Lincoln 7647
Chrsitchurch, 7647
New Zealand

Muhammad Arslan (Contact Author)

Bahria University Alumnus ( email )

44000 Islamabad
Pakistan
+923317500173 (Phone)

HOME PAGE: http://www.muhammadarslan.info/

Lincoln University (NZ) ( email )

PO Box 85084
Ellesmere Junction Road/Springs Road
Lincoln, 7647
New Zealand

Muhammad Sidiqui

Bahria University

E.8 Shangrilla Road
Naval Complex
Islamabad, 44000
Pakistan

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