The Moderating Impact of Political Intervention on the Relationship between Corporate Governance and firm Performance

Abstract

This research scrutinized the moderating effect of Political Intervention (Government Ownership and Government Appointed Directors) on the
association between corporate administration (DUA, the BS, and OC) and the firm performance (ROA) in Pakistan. This study addresses significant
corporate administration aspects for Pakistan’s listed companies and ties together the theoretical and empirical findings of the firm value implications
of political intervention. For this study, the data has been taken from the 3 significant divisions of Pakistan, which are the Fertilizer Industry, Sugar
Industry, and Oil and Marketing Sector, from 2010 to 2020. This research has significance as this topic resides in Pakistan. Yet, besides, this
examination will be providing discernment to the financial specialists that how political interference in a firm’s decision-making is detrimental or
beneficial to firm performance. Politicians might control firms in a way they can benefit themselves; they even might pursue their personal goals. The
study results are consistent as we noticed that corporate governance indicators have a negative and insignificant impact on Firm Performance.
Moreover, one of the variables of Political intervention, GOV_OWN, has a negative impact on firm performance along with the board size (CG
variable). Whereas the other variable of Political Intervention, GOV_APP, positively impacts firm performance along with the board size (CG variable).