Moderating Effect of Corruption in Relationship of Cash Holding and Corporate Governance with Firm’s Performance: Evidence from Pakistan

Abstract

The main purpose of the study is to check the influence of cash holding and corporate governance on firm’s performance, while taking corruption as a moderator. Moreover, leverage (Debt to Equity), firm size and tangibility have been incorporated as control variables. To check the empirical status of the relationship, the data of 70 non-financial firms and for 12 years (2008-2019) have been gathered. After fulfilling, the required assumptions, the descriptive statistics and inferential statistics have been applied. As panel data has been used, so pooled regression has been run to check the empirical status of the hypotheses. The results are depicting that cash hold and corporate governance influence the firm’s performance significantly and positively. Corruption also affects the firm’s performance. Moreover, the corruption is showing moderating impact in relationship of cash holding and corporate governance with firm’s performance. The results of the study are useful for the concerned laws enforce institutions to focus on corruption so that the effect of corporate governance and cash holding on firm performance may be enhanced. Limitations and future directions of the study have also been discussed.