Corporate Governance & Ethical

Constructs: A relationship with Firm

Characteristics
PRESENTING PERSONS: AQSA ANWAR 19L-1652, MAH NOOR 19L-2517
Presenting:

CORPORATE GOVERNANCE & FIRM CHARACTERISTICS:

ETHICAL CONSTRUCTS:

- CEO Duality - Return on Assets

- Board Size - Return on Equity
- Female Board members - Retention Ratio
- Business Education - After tax profit Margin
- Independent Directors - Gearing
GlaxoSmithKline (Pakistan) Limited
 CEO duality only existed from 2011-2014 and eventually from 2015
onward the role of CEO and chairman were separated which is a
positive feature of corporate governance.

 Return on Assets as an indicator of the financial performance has

followed the trend:
Return on Assets

0.3

0.2

0.1
Return on Assets
0
2011 2012 2013 2014 2015 2016 2017 2018

Return on Assets
GlaxoSmithKline (Pakistan) Limited

• Negative financial
performance (ROA,
Correlation analysis ROE, Net Margin)
CEO Duality
CEO Duality • More dividend payout
• Reduced Leverage;
CEO Duality 1 reduced risks
Return on Assets -0.81745
Return on Equity -0.96176
• Positive financial
Retention Ratio -0.60374 performance (ROA,
After tax profit Margin -0.95565 Separate ROE, Net Margin)
Chairman & CEO • More retention
Gearing -0.26511 • Increased Leverage;
Abbot Laboratories (Pakistan)
Limited
 CG & E:
Company has hired one female member on board
in 2015 and had 2 from the years onward. Female Members
 Firm characteristics: Female Members 1
Return on Assets -0.559687044
Return on Equity -0.51125189
Retention Ratio 0.363401116
After tax profit Margin 0.070625221
Having female members on board may reduce Gearing 0.052367974
returns the assets are able to generate since the
females are regarded as being more risk averse than
men by (C.Eckel & J.Grossman, 2008)
 Philip Morris (Pakistan) Limited
CEO Duality BOD Members
CEO Duality 1
Return on Assets and CEO Duality dummy
BOD Members -0.7746 1
0.05
Return on Assets -0.59993 0.365744
0
1 1 1 1 0 0 0 0 Return on Equity -0.14701 -0.06583
-0.05
Retention Ratio -0.33953 0.161038
-0.1
After tax profit Margin -0.52807 0.283726
Return on Assets

Gearing 0.032214 0.251145

Large Board •Better financial Performance, more leveraged, less payout.

Small Board •More payout, less leveraged and negative impact on performance
 Ibrahim Fibre Limited
Business Edu Independent Directors
Business Edu 1
Independent Directors 0.730297 1
Return on Assets -0.17589 -0.63301
Gearing and Independent Directorship Return on Equity -0.25736 -0.72061
1 Retention Ratio -0.24351 -0.27442
0.9 After tax profit Margin 0.069878 -0.41815
0.8 Gearing -0.59322 -0.48364
0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
0 0 0 1 1 1 1 1

Independent directorship is negatively related to financial performance, risks and retention ratio
which negates (Bouaziz & Triki, 2012) which demonstrates that the presence of an independent
director on board has a positive impact on the financial performance of a business.
The Searle Company Limited
Female Members Business Edu Independent Directors CSR Disclosures
Female Members 1
Business Edu 0.0925 1
Independent Directors 0.4472 0.8682 1
CSR Disclosures 0.4472 0.8682 1 1
Return on Assets 0.2769 0.8431 0.8576 0.8576
Return on Equity 0.4133 0.5907 0.6691 0.6691
Retention Ratio -0.1343 -0.7784 -0.7940 -0.7940
After tax profit Margin 0.0387 0.8781 0.8257 0.8257

Gearing -0.1550 -0.9231 -0.9144 -0.9144

Female presence creates positive impact on returns, results in more

payout and less gearing since they are considered risk averse.
The Searle Company Limited
CSR Disclosure, Indepdent Directors and
Financials
0.3500
0.3000
0.2500
0.2000
Profit Margins Trend 0.1500
20.00%
0.1000
18.00%
0.0500
16.00%

14.00% 0.0000
12.00%
0 0 0 1 1 1 1 1
10.00% Return on Assets Return on Equity After tax profit Margin
8.00%

6.00%

4.00%

2.00%

0.00%
2011 2012 2013 2014 2015 2016 2017 2018
Thank You

Lets put up any QUESTIONS!!!