Board Members Effectiveness, Corporate Governance, and their role in Enhancing Financial Performance and Leverage Decision Making: A Study of Pakistan’s Chemical Sector

Abstract

The aim of this study is to explore the impact of corporate governance functions with the firm performance and the financial leverages of the firm in the chemical industry of Pakistan in order to see the impact we use the model of panel regression and we have used the data from 2014 to 2023 as a sample size and we have found mixed impact of corporate governance functions with the firm financial, operational performance and the firm leverages as well among the variables. While meeting among the board members have significant impact on the EPS and ROE of the firm whereas ROA has been affected positively by the size of the board of directors which means higher the number of directors can take much rational and depth decisions. Also, leverages of the firm do not much by the corporate governance functions. Furthermore, independency of board members enhances the Tobin Q of the firm in the chemical sector which has less impact on the EPS and ROA. Other corporate governance factors should be tested with the firm performance and leverages in order to maximize its impact and secure the shareholders wealth and achieve organizational goals effectively. Also size of directors needs to be maintain by at least seven for the efficient performance of the firm and allow BOD to work independently without any influence which leads to improve the firm performance and its leverages in the chemical sector of Pakistan.

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