Multinational Firm, Firm Value and Corporate Governance Quality: Evidence from Pakistan

This study explores the effects of corporate governance quality, multinational firm and non-multinational firm on firm value. Further, this study explores the moderating effects of corporate governance quality with multinational firm and non-multinational firm on firm value. For this purpose, OLS regression is applied. Data related to Pakistan Stock Exchange (PSX) from 2012 to 2021 is used for empirical analysis. Based on data cleaning 173 non-financial firms used for analysis. Results suggest that corporate governance index and non-multinational have positive & significant impact on firm value, while multinational firms have negative & significant effect on firm value. This is because of exchange rate risk related with multinational firm. Both domestic and international businesses experience in quite different ways. This study results support transactional cost and institutional theory. Further multinational firms have positive & insignificant effect on firm value with the moderating effect of corporate governance quality. This suggest that corporate governance quality improve the performance of the multinational firm but not to the complete extend this is may be due to exchange rate risk or other governance and international market related issues. Lastly, non-multinational firms have positive & significant effect on firm value the with moderating effect of corporate governance quality. This study has lessons for investors, managers, and policymakers.