EFFECT OF CORPORATE GOVERNANCE ON FIRM FINANCIAL PERFORMANCE: EVIDENCE FROM THE OIL AND GAS SECTOR OF PAKISTAN

The investigation of the relationship between corporate governance (CG) and the financial performance of firms has long been a topic of controversy, particularly in emerging economies that are still developing their institutional frameworks. The research proposes to investigate the overall impact of CG on financial performance, the independent contributions of the effects of board characteristics and audit committee characteristics, and the moderators of the role of firm-specific factor contributions. In this research, ten oil and gas companies listed on the Pakistan Stock Exchange were under consideration with 52 firm-year observations. Secondary data were extracted from annual reports and financial statements, and financial performance was calculated using the return on assets (ROA), return on equity (ROE), and profit margin (PM) ratios. Panel data regression was used to evaluate the hypotheses. The findings indicated that the independence of audit committees, the frequency of board directors' meetings, and the fact that audit committees met significantly positively influenced ROA and PM. There was also a positive relationship between CEO duality, although board size and board independence remained insignificant. The control variables had a strong impact, including firm size and leverage. This paper suggests that it is necessary to reinforce control over systems, improve the effectiveness of boards, and tailor governance changes with due respect to Pakistan's industrial environment.