Özet:

The study examines the impact of corporate governance on the performance of the pharmaceutical industry in Pakistan. Secondary data obtained from annual reports of the respective pharmaceutical companies. One hundred and ten national and multinational Pharmaceutical firms were selected through convenient sampling method over the period of 2003 to 2013 (total observations = 1210). The panel data approach was used by employing correlation test, Fixed Effects Model (FEM), Random Effects Model (REM), multicollinearity test, and hausman test. The hausman test was used to differentiate between FEM and REM in panel data. The p-value in hausman test is significant (chi2 (9) = 61.940, prob > chi2 = 0.000), therefore, fixed effect model was used to examine the relationship between corporate governance and financial performance. The results of this study revealed that the relationship among CEO duality, board size, board committees, board compensation, board education, board experience, board diversity and board independent director and return on assets were found positive. Moreover, the relationship between board composition and return on assets were observed negative. Overall, it was concluded that corporate governance positively impacted the performance of national and multinational pharmaceutical firms in Pakistan. Key Words: Corporate Governance, Financial Performance, Return on Assets and Pharmaceutical Sector

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