The Effect of Corporate Governance on The Performance of Firms: A study on Pharmaceutical Sector of Pakistan

Abstract

This article focuses on the effect of corporate governance on pharmaceutical sector of Pakistan. This is the quantitative study and it is based on the nine listed pharmaceutical companies of Pakistan. Seven variables are chosen and only one variable is dependent that is return on asset and other six variables are independent. This study also identifies the importance of corporate governance and how it affects the performance of the firm. It has been observed that only one variable which is Board composition has a significant effect on the performance of pharma sector while the other variables which are Board size, Company size, CEO duality, Independent directors and Dependent directors has no significant effect on the performance of pharma sector. Through tests, it is proved that pharma sector is not giving as much importance to corporate governance which is required from the sector.