Impact of corporate governance framework on the organizational performance

Abstract

This particular study has been conducted to find relationships between corporate governance and performance of banks in Pakistan. Corporate governance is the formal mechanism and the system by which management is held accountable to shareholders for its practices and policies. The theoretical stance of study reveals that effective corporate governance system result in high performance of organizations which also prohibits the fraudulent activities followed in the organizations. The independent variables of study include director’s remuneration, communication strategies, code of conduct and governance mechanism. 10 branches of five major banks of Pakistan have been selected in this study. Response rate of 89% has been achieved in survey of 100 management respondents of selected banks. Through statistical analysis, it has been found that performance of banks also depends on the type of communication strategies, executive remuneration and Governance Mechanism. On the other hand, code of conduct does not influence on banks’ performance. The regulatory authorities need to develop strong and effective corporate governance mechanisms and policies for the entire sector because corporate governance directly influences organizational performance.