Board Effectiveness, Ownership Structure and Corporate Performance: Evidence from Pakistan

This unique study has adopted an integrative approach of taking both board effectiveness and ownership structure to measure its effect on firm performance. A random sample of 100 listed non-financial companies on Pakistani Stock Market was selected for the period ranging from year 2007 to 2012. Board effectiveness is measured by independent directors, frequency of meetings, board size and CEO duality, while ownership structure is measured by ownership concentration, institutional ownership, managerial ownership, and firm performance is measured by Marginal Q and ROA. Pooled dummy regression model has been applied for analysis and the results indicate a significant positive impact of independent directors, frequency of meetings and board size on firm performance. On the other hand, the findings of this study showed the adverse effect of ownership concentration and dual role of CEO on the corporate financial performance. The results have implications for regulatory authorities, directors and shareholders to take steps to improve the board and ownership structure for better performance.