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Probability of financial distress and proposed adoption of corporate governance structures: Evidence from Pakistan

Author

Listed:
  • Rabia luqman
  • Masood Ul hassan
  • Shanza Tabasum
  • Maria Shams Khakwani
  • Sadia Irshad

Abstract

This study examines the role of voluntary adoption of corporate governance mechanisms in mitigating the financial distress status of firms. Using the sample of 52 firms from non-financial sector listed at Karachi Stock Exchange and selecting time period of 10 years from 2006 to 2015, the study finds out the practices that are beneficial for firms and helps them in reducing the financial distress. Results of the study show that there is a negative significant relationship of blockholder ownership, director ownership and audit committee with the probability to financial distress. The causal relationship is also tested, and results show that voluntary adoption of corporate governance structures leads towards lower level of financial distress.

Suggested Citation

  • Rabia luqman & Masood Ul hassan & Shanza Tabasum & Maria Shams Khakwani & Sadia Irshad, 2018. "Probability of financial distress and proposed adoption of corporate governance structures: Evidence from Pakistan," Cogent Business & Management, Taylor & Francis Journals, vol. 5(1), pages 1492869-149, January.
    • Handle: RePEc:taf:oabmxx:v:5:y:2018:i:1:p:1492869
    DOI: 10.1080/23311975.2018.1492869
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    Cited by:

    1. Umair Bin Yousaf & Khalil Jebran & Irfan Ullah, 2024. "Corporate governance and financial distress: A review of the theoretical and empirical literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1627-1679, April.
    2. Balagobei, S, 2022. "Corporate Governance and Financial Distress: Empirical Evidence from listed Consumer Services Firms in Sri Lanka ," GATR Journals afr211, Global Academy of Training and Research (GATR) Enterprise.

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