CORPORATE GOVERNANCE AND FIRM VALUE: THE ROLE OF BOARD INDEPENDENCE IN PSX FIRMS

Authors

  • Raheel Manzoor Soomro M.Phil. Scholar, Department of Business Administration, Iqra University (Main Campus) Karachi, & Accounts Officer, Sindh Teacher Education Development Authority (STEDA), School Education & Literacy Department, Government of Sindh.
  • Muhammad Suhaib Baig M.Phil. Scholar, Department of Business Administration, Iqra University (Main Campus) Karachi, & Auditor, Accountant General Sindh.
  • Ashma Nisar M.Phil. Scholar, Department of Business Administration, Iqra University (Main Campus) Karachi, & Senior Relationship Manager, Corporate Banking, Samba Bank Limited

Abstract

This research investigates the effect of board independence on firm value among Pakistan Stock Exchange (PSX)-listed companies, covering an essential research gap in the context of an emerging market with concentrated family ownership dominance. Employing a mixed-methods design, quantitative information from 200 executives, board members, and investors across industries found strong positive correlations between board independence and firm value (Tobin's Q: r = 0.420), financial performance (ROA: r = 0.381), and investor confidence (r = 0.507). Companies with >50% independent boards experienced 29% greater Tobin's Q and 63% greater ROA. Qualitative findings (20 stakeholders) revealed strong family control (facilitating token compliance), lack of competent directors, and poor enforcement of regulations as obstacles to meaningful implementation. Results highlight that actual board independence is good for governance and value, but needs tighter enforcement and cultural changes beyond regulatory compliance.

Keywords: Board Independence, Corporate Governance Effectiveness, Family Ownership Concentration, Firm Value, Pakistan Stock Exchange (PSX).

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Published

2025-08-30

How to Cite

Raheel Manzoor Soomro, Muhammad Suhaib Baig, & Ashma Nisar. (2025). CORPORATE GOVERNANCE AND FIRM VALUE: THE ROLE OF BOARD INDEPENDENCE IN PSX FIRMS. Journal of Management Science Research Review, 4(3), 978–1007. Retrieved from https://jmsrr.com/index.php/Journal/article/view/116

Issue

Vol. 4 No. 3 (2025): Journal of Management Science Research Review

Section

Articles