Corporate governance and firm value: a comparative analysis of state and non-state owned companies in the context of Pakistan

Purpose The purpose of this paper is to examine how corporate governance instruments impact firm value in the context of Pakistan. This paper considers state- and non-state-owned enterprises and examines whether the influence of corporate governance on firm value varies across firms having different...

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Bibliographic Details
Published in:Corporate governance (Bradford) 2018-10, Vol.18 (6), p.1196-1206
Main Authors: Bhat, Kalim Ullah, Chen, Yan, Jebran, Khalil, Bhutto, Niaz Ahmed
Format: Article
Language:English
Subjects:
Accountability
Boards of directors
Comparative analysis
Conflicts of interest
Corporate governance
Decision making
Developing countries
Directors
Emerging markets
Executive compensation
Hypotheses
Industrialized nations
International business
Investigations
LDCs
Outside directors
Public enterprise
Stockholders
Studies
Transparency
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Summary:Purpose The purpose of this paper is to examine how corporate governance instruments impact firm value in the context of Pakistan. This paper considers state- and non-state-owned enterprises and examines whether the influence of corporate governance on firm value varies across firms having different nature of ownership. Design/methodology/approach This study opts for an unbalanced sample of state- and non-state-owned enterprises for the period 2010-2014. Panel data regression is adopted for estimation of main results. The suitable model, i.e. fixed and random effect model, is selected using Hausman specification test. Findings The notable findings show that board independence has a significant and positive relationship with firm value only for state-owned companies. Furthermore, the results show that market capitalization and return on assets have a significant and positive association with firm value for both state- and non-state-owned enterprises. All other variables are found insignificant for both state- and non-state-owned companies, but the results are consistent with those reported in previous studies. Practical implication The findings of the study suggest that fair induction of independent directors, appropriate board size and cost-benefit analysis to conduct frequent meetings can help corporations to improve their performance. Originality/value This study is adding to the current literature by providing new insights and shows that the impact of corporate governance on firm value varies across firms of different types of ownership, i.e. state- and non-state-owned enterprises.
ISSN:1472-0701
1758-6054
DOI:10.1108/CG-09-2017-0208