The effect of board of director characteristics on financial performance : a study on oil and gas sector of Pakistan

Abstract

This thesis provides an empirical understanding of Board of Director’s (BoD’s) characteristics and it affect on the financial performance of Oil and Gas (O&G) sector companies of Pakistan. Appropriate characteristics of BoD’s are the most influential part of corporate which is very beneficial for the enhancement of the firm financial performance. The O&G is one of the largest and the most powerful sector in Pakistan. The secondary data (panel) was taken from Attoc2k Petroleum (AP),Pakistan State Oil (PSO), Attock Refinery (AR),Indus Oil Refinery (IOR),Khalifa Coastal Refinery (KCR),Pak-Arab Refinery (PAR),National Refinery (NR),Pakistan Refinery Limited (PRL),Mari Petroleum Company Limited (MPCL),Oil and Gas Development Company Limited (OGDCL),Pakistan Oil Fields (POF) and Pakistan Petroleum (PP). The data was collected via online business records and yearly consolidated financial statements (balance sheet and income statement) of aforementioned companies for the period of 2000 to 2015. The data was analyzed by utilizing statistical and econometric methods with the support of SPSS software. Drawn from the statistical analysis, there were five findings revealed i.e. 1) the correlation amid board size (BS),number of board meetings and board change (BC) with return on asset (ROA),return on equity (ROE) and Tobin’s Q predicts significant negative relationship,2) correlation amid board composition (BC),chief executive officer (CEO) tenure, board education (BE) and female board members (FBM) with ROA,ROE and Tobin’s Q predicts significant positive relationship with each other,3) CEO compensation with ROA,ROE and Tobin’s Q predicts insignificant positive relationship with each other,4) firm age (FA) with ROA,ROE and Tobin’s Q represents insignificant negative relationship with each other and 5) there also exists insignificant relationship between firm size with return on asset, return on equity and Tobin’s Q. The study suggested that the roles of board of directors and their characteristics are critically important in the contemporary corporate environment in order to ensure the strategies, programs and activities of management are mobilized to achieve the overall missions and goals of the firm. According to the statistical consequence of the study, the characteristics of board of directors have significant effect on oil and gas companies’ financial performance in Pakistan. In addition, it is accepted that the board of directors’ characteristics play a vital role in achieving better firm’s financial performance.

Date of Award	2016
Original language	English
Supervisor	Harun Harun (Supervisor) & Monir Mir (Supervisor)