Corporate Governance and Financial Reporting Transparency: Evidence from an Emerging Market
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Supervisor
Date
2025-10-01
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Abstract
In preventing reporting irregularities and ensuring proper financial transparency, corporate governance plays a key role. In this study, we examine the impact
of five key governance mechanisms—composite corporate governance score, board
independence, board size, institutional ownership, and family ownership, on financial reporting transparency in a developing market setting. Utilizing a balanced panel
of 215 non-financial companies listed on the Pakistan Stock Exchange covering the
years from 2012 to 2022, the analysis uses a panel logistic regression random effects
model to examine the determinants of reliability of financial disclosure. Results imply
that governance scores, board size, and institutional ownership adversely associate
with financial reporting transparency. In contrast, board independence and family
ownership have little explanatory power over the quality of financial disclosures.
One of the unique contributions of this study is the construction and implementation of a context-specific governance index that mirrors Pakistan’s updated corporate
governance code. This study enhances the growing body of literature on corporate
accountability in emerging markets through its combination of governance metrics
with financial reporting outcomes through the lens of the M-score framework as well
as provides practical implications for reforming regulation and protecting investors.
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Attribution-NonCommercial-NoDerivatives 4.0 International
Book title
Studies in Big Data - Integrating Big Data and IoT for Enhanced Decision-Making Systems in Business