Abstract:

This research aims to find the association between financial reporting quality and corporate governance. The current study used the financial data from textile sector firms, registered on Pakistan Stock Exchange and collected data from 2009-2016. Multi-variate regression models i.e. Random effects and Fixed effects models were used to explain these relationships. We used audit committee independence, board independence, institutional shareholders ownership and CEO duality and FRQ in this regression model. Investigation revealed that there is positive relationship between financial reporting quality and corporate governance. The results found that Audit Committee has positive outcome on the Financial Reporting Quality of textile sector companies. Likewise, Board Independence has positive significant effect on the Financial Reporting Quality. While, Institutional Shareholding ownership has also positive effect on the Financial Reporting Quality of firm which means that with the increase in Institutional ownership will enhance the Financial Reporting Quality of the firms. The results also predict positive effect of CEO-Duality on the firm’s financial reporting quality which signifies the importance of Chief Executive Officer Duality in enhancing the firm’s Financial Reporting Quality in Pakistani context. The results are very helpful for the policy makers and investors in their decisions.

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