Introduction:Corporategovernance is an important feature of business. Corporate governance is defineas the form of business in which an organization is aimed, controlled and administrate.The main objective of corporate governance is to keep the attention ofshareholders and stakeholders of the company. When the attention ofstakeholders is protected; this will also bring positive change in performanceof the firm. The corporate governance structure indicates the sharing of roles,responsibilities and rights between different competitor in the firm like asall stakeholders, management and shareholders.
Corporate governance is the means by whichminority shareholders are protected from expropriation by managers orcontrolling shareholders. Stable system of corporate governance is muchnecessary for increasing worth of organization in both developing and developedfinancial institution. Financial strength and value for corporation differ bythe reason of unequal formation of corporate governance in growing and well establishedfinancial institution. Corporategovernance is the classification of rules, practices and process by which afirm is directed and controlled. Corporate governance basically involved inbalancing the interests of a firm’s many stakeholders such as shareholders,management, consumers, suppliers, financiers, government and the community. “Corporategovernance is the classification by which firms are directed and controlled”.
Specially it is the framework by which a variety of stakeholder interests are objective. “Corporategovernance involve a set of association between a firm’s management, its board,its shareholder and stakeholder. Corporate governance also provide thestructure of a company through which theobjective of the business are set and the way of attaining those objectives andmonitor performance are determined.” The objective ofour study is to examine how the performance of the company is affected by thecorporate governance and what is the connection that exist between the company performancein Pakistan. We acknowledge that the extent of corporate governance in any firmis largely subjective in nature, making it difficult to measure it by usingSecondary Method. CorporateGovernance isnot an end but it’s a continuous process.
The researchquestion is to examine the impact of corporate governance on company financialperformance. How it effect the firms in Pakistan?· Is there any association exists betweencorporate governance and corporate financial performance?· If it is there than how much significantis that relationship?· What are the implications of analysis inPakistani context?The problem ofour research is to improve the perceiving of investors about the significanceof corporate governance of developed and non-developed economy. The need foreffective corporate governance is evidenced and reactionary governance reformshave been instigated to prevent such events happening again to protect theinterest of investors in developing countries. The problem pertaining tocorporate governance had been increasingly spoken of in the recent past and therevised and expanded Code of Best Practice (CBP) on corporate governance. Themain issue is to measure whether the vacant corporate governance mechanismsinfluence the company performance in Pakistan.
It is importantfor company to think that the impact of corporate governance on companyfinancial performance. The literature suggested that there is significantrelation between corporate governance and firm’s financial performance.Corporate governance is intended to increase the responsibility of company andto evade huge disaster.