Examining the Non-linear Relationship between Corporate Governance and Firm Performance in Pakistan

Abstract

This study looks into the impact of board structure, reporting and disclosure and transparency on the success of family businesses in Pakistan. It also examine if the relationship between corporate indices is linear or non-linear in nature? BOD index, reporting index, and disclosure index are constructed based on governance practices. The dependent variable is return on assets (ROA), and Corporate the relationships are estimated using GMM. The findings reveal a Disclosure, strong relationship between each governance index and ROA. Corporate Further, the findings confirm the presence of non-linearity of the Governance, CG indices-performance relationships. Family firms are prone to Corporate extreme agency disputes, and both internal and external Reporting, Firm Performance governance is needed to protect minority shareholders' interests Corresponding from the family firm's entrenched ultimate controllers. The results show that good corporate governance practices have a significant positive monitoring impact on the success of family businesses in Pakistan.