A STUDY ON VALUE RELEVANCE OF CORPORATE GOVERNANCE DISCLOSURE: EVIDENCE FROM PAKISTAN STOCK EXCHANGE

Abstract

This paper focus on the reform process taking place in Pakistan
related to disclosures of financial information in annual reports at the
same time changes in regulatory framework related to corporate
governance. For this purpose, data of fifty companies listed on Pakistan
Stock Exchange is used for the time period 2010-2013 by applying panel
regression. Corporate governance disclosure index is adopted to
empirically analyze the impact of corporate governance disclosures on the
value relevance of firm. Results of panel regression show that overall
corporate governance disclosure have positive and significant impact on
firm value, whereas from results of sub-indices ownership structure
disclosure is more relevant for investors as compared to other two subindices: board and management structures disclosure and financial
information disclosure. Further, results show that control variables
liquidity, profitability and firm size have positive impact on firm value.
Keywords: Corporate Governance, Value Relevance, Pakistan Stock
Exchange, Corporate Governance Disclosure, panel data.
Article classification: Research paper
JEL Classification: G32, G34, G39