Corporate Governance and Organisational Performance by Naeem Tabassum & Satwinder Singh

Author:Naeem Tabassum & Satwinder Singh
Language: eng
Format: epub
ISBN: 9783030485276
Publisher: Springer International Publishing

Control Variables

Finally, when considering the control variables used in this research, Table 5.16 shows that FSIZE—firm size—is positively associated with the accounting-based measures of performance, with the degree of significance seen to be (r = 0.295, p < 0.01) between FSIZE and ROA, and (r = 0.220, p < 0.01) between FSIZE and ROE. With the exception of CEODUL, there are positive correlations between FSIZE, and the other independent variables used in the analysis. Although firm age (FAGE) is positively linked with the performance of firms, the relationship is significant only between FAGE and TQ (r = 0.184, p < 0.01). FAGE is also significantly correlated with BIND, ACIND, BCOMTS, BSIZE, BMETS and FSIZE. Consistent with the previous evidence, there is a significant negative correlation between FSIZE and CEO duality, CEODUL. Insofar as the relationship of leverage is concerned, the results indicate a significant positive correlation between LEVERAGE and TQ (r = 0.272, p < 0.01); otherwise, LEVERAGE is negatively correlated with the accounting-based measures of performance, with this negative correlation significant only between LEVERAGE and ROA (r = –0.542, p < 0.01). The correlations of LEVERAGE are also negative with ACIND, BCOMTS, BMETS and FSIZE at p < 0.01.

The overall significantly positive correlation between Board structure and the performance variables suggests that capital markets in Pakistan appreciate firms’ adoption of good CG practices. The size of all of the bivariate correlations between independent variables and the three dependent variables are only weak to modest, however, therefore suggesting the explanatory power of the research model is likely to be weak to moderate.

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