Board Characteristics and Firms’ Financial Performance in Eras of Corporate Governance Codes 2012 in Manufacturing Sector of Pakistan

This paper aims to examine the relationship between corporate governance practices and firm performance in Pakistan, as a result of the adoption of Corporate Governance Codes 2012. Fifty firms are selected randomly from manufacturing sector of Cement, Textile and Sugar industries. Data for CG Codes is taken from 2012 to 2016. The effectiveness of the board of directors is analyzed through the use of different variables: CEO duality,CEO compensation, CEO tenure, and board meetings. The financial performance is measured by return on assets (ROA). Literature in relation to corporate governance practices and firm performance reported mixed results. The conceptual framework underpinning this study described how the board structure and corporate reporting practices of firms in Pakistani manufacturing sector effect firm performance. In this framework Separate leadership refers to the separation of the position of chairman and CEO, CEO tenure means the time of CEO office holding, CEO compensation refers to the benefits and rewards of the CEO and board meetings refers to the frequency of board meetings in a year. Firm age and firm size are taken as control variables.