Corporate Governance and Corporate Investment Efficiency: A Comparative Sectoral Analysis of Family and Non-Family Firms

Purpose: The study aimed to ascertain the relationship between corporate governance practices and corporate investment efficiency in Pakistani family and non-family enterprises. The sample comprised 230 non-financial companies listed on the Pakistan Stock Exchange (PSX). The sample is then bifurcated not only into family and non-family categories but also into three sectors: manufacturing, Energy & Utilities, and service. The study period covered 2015 to 2022. The intricate linkages across sectors and between family and non-family were examined using a multi-group approach. Design/Methodology/Approach: For the main analysis, the Random Effect Model (REM) is used, while the Dynamic GMM model also supports robustness and continuity in investment efficiency across firms and sectors. Findings: Corporate investment efficiency is differentially affected by corporate governance procedures across family and non-family enterprises and across other industries. Corporate Investment Efficiency is generally positively and significantly correlated with CEO Duality and CEO Qualification for family businesses. Board independence becomes more relevant in non-financial firms. The manufacturing sector exhibits a strong and steady connection with corporate investment efficiency under sector-wise analysis, while the energy and utilities and service sectors exhibit inconsistent and variable outcomes. Implications/Originality/Value: The study’s findings provide several notable comparative evidences from an emerging economy (Pakistan). The results have applications for investors, regulators, and legislators.