Corporate governance and cost of capital: evidence from Pakistani listed firms

Khan, Muhammad Yar (2016) Corporate governance and cost of capital: evidence from Pakistani listed firms. PhD thesis, University of Glasgow.

Full text available as:
Download (1MB) | Preview
Printed Thesis Information:


This thesis investigates the effectiveness of Corporate Governance (CG) reforms in Pakistan. Using a sample of 160 Pakistani firms from 2003 to 2013 and governance data collected manually from the annual reports, this thesis investigates seven closely related and important corporate issues that are related to the compliance of governance rules. Specifically, it aims to : (i) investigate the degree of CG compliance with 2002 Pakistani Code of CG (PCCG); (ii) determine whether the introduction of 2002 PCCG has improved Pakistani CG practices; (iii) investigate the determinants of CG compliance and disclosure for Pakistani listed firms; (iv) test the nexus between CG compliance with the 2002 PCCG and firms’ cost of capital (COC); (v) investigate the impact of different individual CG mechanisms on listed firms COC; (vi) examine how different ownership structures impact on firms’ COC; and (vii) analyse relationship between CG structures and Cost of Equity (COE) as well as Cost of Debt (COD) for Pakistani listed firms. These empirical investigations report some important results. First, the reported findings suggest that Pakistani firms have responded positively to governance disclosure requirements over the eleven year period from 2003 to 2013. The results also show that the introduction of the PCCG in 2002 has improved CG standards by Pakistani listed firms. Second, the reported results related to the determinants of CG compliance demonstrate that significant and positive association between institutional, government and foreign ownership with CG compliance. However, findings relating to the determinants of CG compliance show a negative and significant association between board size and block ownership with CG compliance and disclosure. The study finds no significant relationship between director ownership, audit firm size and the presence of female board members with the constructed Pakistan Corporate Governance Index (PCGI). Third, the investigation on the relationship between CG and COC report a significantly negative nexus between PCGI and firms’ COC. The investigation on the association between ownership structures and COC report a negative and significant nexus between block ownership with firms’ COC. Further, a number of robustness analyses performed in this study suggest that the empirical results reported in this study are generally robust to the alternative CG variables, alternative COC variables and potential endogeneity problems.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: Corporate Governance, CG, CG reforms, Pakistan, cost of capital, cost of debt, cost of equity, CG Index, binary index, Muhammad Yar Khan, PhD thesis, CG in Pakistan, Pakistani listed firms, effectiveness of CG, CG code, PCCG, Pakistani CG Code, Ownership Structures, director ownership, institutional ownership, family ownership, foreign ownership, block ownership, multiple theoritical approach, corporate governance and agency theory, stewardship theory, board diversity, gender diversity, nationality diversity, audit committee, Big4, audit firm size, board size, PCGI, Pakistani CG Index, Yar Khan, Khan, endogeneity, two stage least square, firm value, profitability, COC, determinants of disclosure, factor influencing CG compliance and disclosure, level of CG compliance, Professor Kwaku Opong, Dr Marco Guidi, level of compliance, SECP, Security and Exchange Commission of Pakistan, KSE, ISE, LSE, shareholder approach, stakeholder approach, Anglo American, annual reports.
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
Colleges/Schools: College of Social Sciences > Adam Smith Business School
Supervisor's Name: Opong, Professor Kwaku and Marco, Dr. Guidi
Date of Award: 2016
Depositing User: Mr Muhammad Yar Khan
Unique ID: glathesis:2016-7722
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 01 Nov 2016 11:27
Last Modified: 23 Nov 2016 08:30

Actions (login required)

View Item View Item


Downloads per month over past year