School of Commerce and Accountancy (SCA)

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Financial Distress and Corporate Governance (Evidence from Pakistan)
(University of Management & Technology, 2018) Ahmed, Waqas
The present study is conducted to determine the relationship between corporate governance and financial distress. The objective of this study is to analyze whether corporate governance variables can predict financial distress, and to explore relationship between corporate governance mechanisms and financial distress for Pakistani listed companies. This study is descriptive in nature and random sampling is used to determine the relationship between corporate governance mechanism and financial distress. Population consisted of all firms registered on PSE and data is collected from 2011 to 2016. Sample consisted of 93 financially distressed firms and EPS is used as proxy for financially distressed firms. Those firms whose EPS is decreasing during given years are considered as financially distressed firms. Data is analyzed by using statistical methods, as data in present study is panel in nature, so fixed & random model is also applied to extract the relationship between dependent and independent variable. Results of this study show that board size of financially distressed firms was large with less independent directors. Firms hold less number of boards of directors meetings. It is also found in this study that financially distressed firms debt ratio was 46% and some firms are also following CEO duality.