Corporate governance and firm performance with moderating role of firm image: evidence from Pakistan

Abstract

This research was mainly focused on the proposed hypothetical model to explore the association between the corporate governance and firm performance of banking sector in Pakistan, while observing the firm image in moderating role. Sample population consists of 8 banks and data collection was done through convenience sampling technique. In statistical analysis to draw conclusions the analytical tools such as correlation, and regression analysis were used. This research was carried out to study, evaluate, analyze and interpret all the financial sector’s parameters related to corporate governance and firm performance of the banks operating in Pakistan. Main objective of this study was to be aware of the corporate governance and firm image and their impact on the performance of the banks of Pakistan. It’s a challenge of the today’s Pakistani economy to forecast and assess the upcoming risks and make preemptive measures to save the bank’s profitability and ultimately save the Pakistan’s economy from big economic shocks. For this purpose three independent variables has been used to demonstrate the corporate governance dimensions on bank’s performance. These three independent variables are foreign ownership, managerial ownership and board size while the firm performance has been measured on the basis of two measures ROE and ROA. The data for evaluation was collected from 8 commercial banks of Pakistan for the period of 2012-2017. This study employed Descriptive statistical analysis, correlation effect of dependent variables on independent variables, regression analysis to evaluate the effect of corporate governance factors on the firm performance of the banks with the moderating role of firm image. It was found that corporate governance factors have significant impact on ROA while firm image have significant impact on ROA and ROE. This research has been aimed to provide repercussions for firms by throwing light on the potential means of focusing FP. This research will provide practical grounds for other firms to adopt the ways in order to improve FP. The importance and implementation of CG in order to enhance FP. Firm image as a moderator positively moderated and highlighted the need that how firm image could be helpful with CG and FP.