Corporate Governance and Its Impact on Profitability of the Oil and Gas Sector of Pakistan

Abstract

The aim of this study is to explore the impact of corporate governance on the profitability of the Oil and Gas sector of Pakistan. This research is done by using secondary data that has been collected from annual reports for a period of 5 years, from 2011 to 2015. To study the association between Corporate Governance and firm profitability, Co-integration, Unit root, Vector Error Correction estimates and unit Granger Causality test were used. Independent variables of the study are the board of independent director, the board size, board remuneration and size of the firm whereas the dependent variables are the return on assets and return on sales. The findings show the significant relationship among all variables included in this study.  Improved standards on the qualification of the board members are recommended to the regulators. The research can further investigate the Corporate Governance impact on firm profitability in different sectors of the economy.