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© 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.

Abstract

This research aims to explore the impact of corporate governance on firm performance while considering financial leverage as a mediating variable. This study was conducted in the non-financial sector of Pakistan, and data was collected from financial statements. A sample of 150 firms was selected from those registered on the Pakistan Stock Exchange during the period of 2011–2021. Results show that corporate governance is associated with firm performance. Board size has a positive relationship with firm performance; as board size increases, the performance of the firm also increases. Board independence is positively and significantly associated with firm performance. Audit committee size is also positively associated with firm performance. Female directors on the board are also associated with positive firm performance. Board independence, board size, audit committee, and female directorship were positively associated with financial leverage. Corporate governance protects the interest of shareholders and transfers risk from shareholders to debt holders. Results show that corporate governance enhances the financial distress cost by enhancing the debt ratio in the financial leverage. Financial leverage partially mediates the board size and board independence with firm performance, while audit committee size and female directorship relationship with firm performance are fully mediated.

Details

Title
Does Financial Leverage Mediates Corporate Governance and Firm Performance?
Author
Huynh, Quang Linh 1   VIAFID ORCID Logo  ; Hoque, Mohammad Enamul 2   VIAFID ORCID Logo  ; Susanto, Perengki 3   VIAFID ORCID Logo  ; Waqas Ahmad Watto 4   VIAFID ORCID Logo  ; Ashraf, Maryam 5 

 Faculty of Business Administration, Ho Chi Minh City University of Food Industry, Ho Chi Minh City 700000, Vietnam 
 BRAC Business School, BRAC University, Dhaka 1212, Bangladesh 
 Department of Management, Universitas Negeri Padang, Padang 25171, Indonesia 
 Department of Commerce, Bahauddin Zakariya University Multan, Multan 60000, Pakistan 
 Department of Accountancy, Superior University of Lahore, Lahore 54600, Pakistan 
First page
13545
Publication year
2022
Publication date
2022
Publisher
MDPI AG
e-ISSN
20711050
Source type
Scholarly Journal
Language of publication
English
ProQuest document ID
2728546566
Copyright
© 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.