Table A1 Items of CGCI_UW and their...

Table A1

Items of CGCI_UW and their weightings

		Pre-2012				Post-2012
		No	Mean	Minimum	Maximum	No	Mean	Minimum	Maximum
Board structure
BS1	Code encourages effective representations of iNEDs	1,420	0.36	0	1	1,704	0.81	0	1
BS2	Code requires provision of directors’ affiliations	1,420	0.18	0	1	1,704	0.93	0	1
BS3	Minority class shareholders should be encouraged to contest elections	1,419	0.27	0	1	1,704	0.61	0	1
BS4	At least one independent director representing institutional equity interest	1,420	0.25	0	1	1,704	0.40	0	1
BS5	No more than 1 / 3 of elected directors, including the CEO as executive directors	1,420	0.34	0	1	1,704	0.80	0	1
BS6	Directors must file a declaration acknowledging duties and powers under the relevant laws	1,420	1.00	1	1	1,704	1.00	1	1
BS7	Formal and transparent disclosures of directors’ aggregate remuneration	1,420	0.96	0	1	1,704	0.97	0	1
BS8	No director can serve as a director of 10 other listed companies	1,420	0.96	0	1	1,704	1.00	0	1
BS9	No director can serve as a director of more than 7 listed companies	1,420	0.08	0	1	1,704	1.00	0	1
BS10	A director should be a taxpayer and must not have court convictions	1,420	0.30	0	1	1,704	0.12	0	1
BS11	Tenure of the director’s office is 3 years, and any vacancy shall be filled within 90 days					1,704	0.52	0	2
	Cronbach’s alpha – α	0.69				0.54
	*Inter-item mean correlation – r*	0.20				0.11
Responsibilities, powers and functions of board
RPFBD1	Prepare and circulate a “statement of ethics & business practices”	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD2	Directors adopt firm’s vision/mission statement and overall strategy	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD3	The board establishes a system of sound internal control	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD4	The chairperson of the board should preferably be an NED/iNED	1,420	0.78	0	1	1,704	0.87	0	1
RPFBD5	The chairperson of the board, if present, should chair meetings	1,420	0.94	0	1	1,704	0.95	0	1
RPFBD6	In the absence of chairperson, companies should provide information on the meeting(s) chair	1,420	0.78	0	1	1,694	0.82	0	1
RPFBD7	Minimum one meeting per quarter	1,420	0.99	0	1	1,704	0.99	0	1
RPFBD8	Written notices must be circulated no less than 7 days before meetings	1,420	0.95	0	2	1,704	1.00	0	1
RPFBD9	Orientation course for the education of directors	1,420	0.25	0	1	1,704	0.62	0	1
RPFBD10	Mandatory certification under DTP from institutions that meet SECP criteria					1,704	0.51	0	1
	Cronbach’s alpha – α	0.61				0.67
	*Inter-item mean correlation – r*	0.15				0.17
Corporate and financial reporting framework
CFRF1	Integrity of financial statements, books of accounts and application of appropriate accounting policies	1,420	0.99	0	1	1,704	0.98	0	1
CFRF2	International accounting standards as applicable in Pakistan have been followed	1,420	0.99	0	1	1,704	0.98	0	1
CFRF3	Effectiveness and soundness of internal control systems	1,420	0.99	0	1	1,704	0.98	0	1
CFRF4	Assurance for the firm as a going concern (or reasons explaining otherwise)	1,420	0.99	0	1	1,704	0.98	0	1
CFRF5	No material departure from the required governance regulations	1,420	0.99	0	1	1,704	0.98	0	1
CFRF6	Reasons and explanation given for a significant deviation (if any) from past year’s operating results	1,420	0.84	0	1	1,704	0.84	0	1
CFRF7	Provision of key operating and financial data (summarized) for the past 6 years	1,420	0.96	0	1	1,704	0.99	0	1
CFRF8	Reasons provided for not announcing dividends or issuing bonus shares	1,420	0.76	0	1	1,704	0.84	0	1
CFRF9	Significant plan and decisions such as corporate restructuring, business expansion or discontinuance of operations	1,420	0.94	0	1	1,704	0.98	0	1
CFRF10	A statement on the value of investments	1,420	0.68	0	1	1,704	0.82	0	1
CFRF11	Number of board meetings and attendance by each director	1,420	0.99	0	1	1,704	1.00	0	1
CFRF12	Pattern of shareholding to disclose the aggregate number of shares held	1,420	0.97	0	1	1,704	1.00	0	1
CFRF13	Quarterly unaudited financial statements of listed companies	1,420	1.00	0	1	1,704	1.00	1	1
CFRF14	Half-yearly financial statements should be limited-scope reviewed	1,420	1.00	0	1	1,704	1.00	1	1
CFRF15	Annual financial statements should be circulated no later than 4 months from the close of financial year	1,420	0.39	0	1	1,704	0.38	0	1
CFRF16	All material information that can affect the price of the company’s share should be immediately disseminated to the SECP and stock exchange(s).	1,420	0.31	0	1	1,704	0.92	0	1
CFRF17	CEO and CFO are responsible for duly endorsing financial statements	1,420	0.99	0	1	1,704	1.00	0	1
CFRF18	After the endorsement who has finally approved or signed the financial statements	1,420	0.99	0	1	1,704	0.99	0	1
CFRF19	The company secretary should submit a secretarial compliance certificate as a part of the annual return filed with the registrar of companies	1,420	1.00	0	1	1,704	1.00	1	1
	Cronbach’s alpha – α	0.75				0.73
	*Inter-item mean correlation – r*	0.14				0.15
Functions and responsibilities of the audit committee
FRAC1	The audit committee should comprise no less than three members including a chairperson	1,420	0.99	0	1	1,704	1.00	1	1
FRAC2	The majority/all members should be non-executive directors, with at least one iNED	1,420	0.94	0	1	1,704	0.55	0	1
FRAC3	Chairperson AC shall preferably be an NED/iNED	1,420	0.93	0	1	1,704	0.54	0	1
FRAC4	Names of audit committee members should be disclosed in each annual report	1,420	0.96	0	1	1,704	1.00	1	1
FRAC5	The audit committee should meet once every quarter	1,420	0.97	0	1	1,704	0.97	0	1
FRAC6	The BoDs should determine the terms of reference of the audit committee	1,420	0.96	0	1	1,704	0.99	0	1
FRAC7	The audit committee shall appoint a committee secretary	1,419	0.73	0	1	1,704	0.94	0	1
FRAC8	There must also be an HR&R Committee of at least 3 members comprising most NEDs, including preferably an iNED					1,704	0.73	0	1
	Cronbach’s alpha – α	0.65				0.45
	*Inter-item mean correlation – r*	0.21				0.12
Eligibility and responsibility of external auditors
EREA1	The appointed external auditor should have a satisfactory rating under the quality control review program	1,419	0.98	0	1	1,698	0.99	0	1
EREA2	External auditors should be compliant with the IFAC guidelines	1,420	0.98	0	1	1,704	0.99	0	1
EREA3	The recommendations of the audit committee for the appointment of retiring auditors	1,420	0.88	0	1	1,704	0.95	0	1
EREA4	Auditors should not provide services other than audit except in accordance with the IFAC guidelines	1,420	0.98	0	1	1,704	0.99	0	1
EREA5	All listed non-financial companies must at a minimum rotate the engagement partner every five/three years	1,420	0.98	0	1	1,704	0.27	0	1
	Cronbach’s alpha – α	0.72				0.74
	*Inter-item mean correlation – r*	0.34				0.37
	CGCI – α	0.87				0.78
	*CGCI inter-item mean correlation – r*	0.12				0.11

		Pre-2012				Post-2012
		No	Mean	Minimum	Maximum	No	Mean	Minimum	Maximum
Board structure
BS1	Code encourages effective representations of iNEDs	1,420	0.36	0	1	1,704	0.81	0	1
BS2	Code requires provision of directors’ affiliations	1,420	0.18	0	1	1,704	0.93	0	1
BS3	Minority class shareholders should be encouraged to contest elections	1,419	0.27	0	1	1,704	0.61	0	1
BS4	At least one independent director representing institutional equity interest	1,420	0.25	0	1	1,704	0.40	0	1
BS5	No more than 1 / 3 of elected directors, including the CEO as executive directors	1,420	0.34	0	1	1,704	0.80	0	1
BS6	Directors must file a declaration acknowledging duties and powers under the relevant laws	1,420	1.00	1	1	1,704	1.00	1	1
BS7	Formal and transparent disclosures of directors’ aggregate remuneration	1,420	0.96	0	1	1,704	0.97	0	1
BS8	No director can serve as a director of 10 other listed companies	1,420	0.96	0	1	1,704	1.00	0	1
BS9	No director can serve as a director of more than 7 listed companies	1,420	0.08	0	1	1,704	1.00	0	1
BS10	A director should be a taxpayer and must not have court convictions	1,420	0.30	0	1	1,704	0.12	0	1
BS11	Tenure of the director’s office is 3 years, and any vacancy shall be filled within 90 days					1,704	0.52	0	2
	Cronbach’s alpha – α	0.69				0.54
	Inter-item mean correlation – r	0.20				0.11
Responsibilities, powers and functions of board
RPFBD1	Prepare and circulate a “statement of ethics & business practices”	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD2	Directors adopt firm’s vision/mission statement and overall strategy	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD3	The board establishes a system of sound internal control	1,420	0.98	0	1	1,704	1.00	0	1
RPFBD4	The chairperson of the board should preferably be an NED/iNED	1,420	0.78	0	1	1,704	0.87	0	1
RPFBD5	The chairperson of the board, if present, should chair meetings	1,420	0.94	0	1	1,704	0.95	0	1
RPFBD6	In the absence of chairperson, companies should provide information on the meeting(s) chair	1,420	0.78	0	1	1,694	0.82	0	1
RPFBD7	Minimum one meeting per quarter	1,420	0.99	0	1	1,704	0.99	0	1
RPFBD8	Written notices must be circulated no less than 7 days before meetings	1,420	0.95	0	2	1,704	1.00	0	1
RPFBD9	Orientation course for the education of directors	1,420	0.25	0	1	1,704	0.62	0	1
RPFBD10	Mandatory certification under DTP from institutions that meet SECP criteria					1,704	0.51	0	1
	Cronbach’s alpha – α	0.61				0.67
	Inter-item mean correlation – r	0.15				0.17
Corporate and financial reporting framework
CFRF1	Integrity of financial statements, books of accounts and application of appropriate accounting policies	1,420	0.99	0	1	1,704	0.98	0	1
CFRF2	International accounting standards as applicable in Pakistan have been followed	1,420	0.99	0	1	1,704	0.98	0	1
CFRF3	Effectiveness and soundness of internal control systems	1,420	0.99	0	1	1,704	0.98	0	1
CFRF4	Assurance for the firm as a going concern (or reasons explaining otherwise)	1,420	0.99	0	1	1,704	0.98	0	1
CFRF5	No material departure from the required governance regulations	1,420	0.99	0	1	1,704	0.98	0	1
CFRF6	Reasons and explanation given for a significant deviation (if any) from past year’s operating results	1,420	0.84	0	1	1,704	0.84	0	1
CFRF7	Provision of key operating and financial data (summarized) for the past 6 years	1,420	0.96	0	1	1,704	0.99	0	1
CFRF8	Reasons provided for not announcing dividends or issuing bonus shares	1,420	0.76	0	1	1,704	0.84	0	1
CFRF9	Significant plan and decisions such as corporate restructuring, business expansion or discontinuance of operations	1,420	0.94	0	1	1,704	0.98	0	1
CFRF10	A statement on the value of investments	1,420	0.68	0	1	1,704	0.82	0	1
CFRF11	Number of board meetings and attendance by each director	1,420	0.99	0	1	1,704	1.00	0	1
CFRF12	Pattern of shareholding to disclose the aggregate number of shares held	1,420	0.97	0	1	1,704	1.00	0	1
CFRF13	Quarterly unaudited financial statements of listed companies	1,420	1.00	0	1	1,704	1.00	1	1
CFRF14	Half-yearly financial statements should be limited-scope reviewed	1,420	1.00	0	1	1,704	1.00	1	1
CFRF15	Annual financial statements should be circulated no later than 4 months from the close of financial year	1,420	0.39	0	1	1,704	0.38	0	1
CFRF16	All material information that can affect the price of the company’s share should be immediately disseminated to the SECP and stock exchange(s).	1,420	0.31	0	1	1,704	0.92	0	1
CFRF17	CEO and CFO are responsible for duly endorsing financial statements	1,420	0.99	0	1	1,704	1.00	0	1
CFRF18	After the endorsement who has finally approved or signed the financial statements	1,420	0.99	0	1	1,704	0.99	0	1
CFRF19	The company secretary should submit a secretarial compliance certificate as a part of the annual return filed with the registrar of companies	1,420	1.00	0	1	1,704	1.00	1	1
	Cronbach’s alpha – α	0.75				0.73
	Inter-item mean correlation – r	0.14				0.15
Functions and responsibilities of the audit committee
FRAC1	The audit committee should comprise no less than three members including a chairperson	1,420	0.99	0	1	1,704	1.00	1	1
FRAC2	The majority/all members should be non-executive directors, with at least one iNED	1,420	0.94	0	1	1,704	0.55	0	1
FRAC3	Chairperson AC shall preferably be an NED/iNED	1,420	0.93	0	1	1,704	0.54	0	1
FRAC4	Names of audit committee members should be disclosed in each annual report	1,420	0.96	0	1	1,704	1.00	1	1
FRAC5	The audit committee should meet once every quarter	1,420	0.97	0	1	1,704	0.97	0	1
FRAC6	The BoDs should determine the terms of reference of the audit committee	1,420	0.96	0	1	1,704	0.99	0	1
FRAC7	The audit committee shall appoint a committee secretary	1,419	0.73	0	1	1,704	0.94	0	1
FRAC8	There must also be an HR&R Committee of at least 3 members comprising most NEDs, including preferably an iNED					1,704	0.73	0	1
	Cronbach’s alpha – α	0.65				0.45
	Inter-item mean correlation – r	0.21				0.12
Eligibility and responsibility of external auditors
EREA1	The appointed external auditor should have a satisfactory rating under the quality control review program	1,419	0.98	0	1	1,698	0.99	0	1
EREA2	External auditors should be compliant with the IFAC guidelines	1,420	0.98	0	1	1,704	0.99	0	1
EREA3	The recommendations of the audit committee for the appointment of retiring auditors	1,420	0.88	0	1	1,704	0.95	0	1
EREA4	Auditors should not provide services other than audit except in accordance with the IFAC guidelines	1,420	0.98	0	1	1,704	0.99	0	1
EREA5	All listed non-financial companies must at a minimum rotate the engagement partner every five/three years	1,420	0.98	0	1	1,704	0.27	0	1
	Cronbach’s alpha – α	0.72				0.74
	Inter-item mean correlation – r	0.34				0.37
	CGCI – α	0.87				0.78
	CGCI inter-item mean correlation – r	0.12				0.11

Notes:

Table 1 presents all items of five sub-indices constructed to measure corporate governance compliance using the unweighted method in contrast to the weighted method of Shakri et al. (2022); guidelines of each sub-index are extracted from the Code of Corporate Governance of Pakistan; a score of 1 is assigned when a company complies with the prescribed guideline and 0 otherwise; mean scores, maximum and minimum values are presented; at the end of each sub-index, Cronbach’s alpha scores and inter-item mean correlations are provided for internal consistency of each sub-index; the abbreviations used are: iNED = independent non-executive directors; NED = non-executive directors; BoD = board of directors; CEO = chief executive officer; CFO = chief financial officer; SECP = securities and exchange commission of Pakistan

Source: Authors’ own work

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