Empirical Relationship between Corporate Governance and Profitability: Evidence from Pakistan Pharmaceutical Sector

Abstract

Firms’ performance operating in Pakistan and the corporate governance, identification of the relationship between both, basically the main purpose of this study. Author tried to identify the basic elements for corporate governance through the review of literature, resulting (i) the Size of Board of Directors, (ii) Female as a part of Board of Directors (iii) the Duality of CEO were found as corporate governance elements. By using the statistical techniques on 9 listed pharmaceutical firm trading over the period from 2011 to 2015 in Pakistan stock exchange. The findings of this study indicate that elements of corporate governance such as the presence of female board members, the duality of the CEO, the board size have negative effects on the performance of firms, as measured by the return on equity (ROE).