Effect of Corporate Governance (CG) Practices on Financial Reporting Quality (FRQ); A Context of CEO Dismissal History

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The current study aimed to scrutinize the consequences of corporate-governance (CG) factors on the financial reporting quality (FRQ) for firms listed on Karachi-Stock-Exchange (KSE), Pakistan from the time period (2004-2021). The study only focused on non-financial firms of Pakistan. Moreover, 980 financial reports of 70 companies were investigated to determine the relationship between CG and FRQ. Moreover, the reasons behind increased incidences and considerable attention in the history of Chief Executive Officer (CEO) dismissals of different well-known companies were also investigated. McNichols’s model was used to determine the quality of financial reporting. However, few proxies were taken to measure the governance effect, board size, institutional shareholding, board independence, and board meeting frequencies. The current study used two-panel modelling methodology in which the first panel was constructed on a CG index with FRQ. Whereas, the second panel was constructed on individual proxies of CG. The study concluded that CG had a positive and significant impact on FRQ in which board size and board independence had an essential rule to present a better quality of FR.