Interaction Between Conservatism Accounting, Financial Performance and Corporate Governance: Evidence from Pakistan’s Cement Industry
Keywords:
Accounting conservatism. Corporate governance, Corporate financial performance, Principal Component AnalysisAbstract
The prime intention of present study is to inspect the corporate governance as an interaction variable in understanding the association between accounting conservatism and entity’s fiscal performance. This study used the accrual model created by Givoly and Hayn (2000) to quantify accounting conservatism. The fiscal performance of entities was assessed by principal component analysis based on four key financial performance indicators. Similarly, a composite variable for corporate governance was created through principal component analysis of eleven governance variables. The secondary data were obtained from the financial reports of cement sector companies registered on the Pakistan Stock Exchange over a period of twelve-years, from 2011 to 2022. This study analyzed the data using panel data techniques, specifically fixed effects models. The outcomes indicated that accounting conservatism has a notable effect on the entity's financial performance, while corporate governance was found to significantly moderate this relationship. This study believed on stakeholder theory to explain these dynamics. By looking into how governance systems affect the link between enterprise’s financial performances and conservatism accounting. This study contributes valuable insights to the prevalent literature for future researchers and policymakers, particularly in the context of cement sector firms in Pakistan.
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Copyright (c) 2024 Dr. Usman Ali, Afzal Ahmad, Dr. Abdul Hafeez, Dr. Muhammad Saeed Ahmad, Akhtar Mahmood
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