Organizational Sustainability in the Light of Corporate Governance: Pre-COVID Empirical Analysis

Abstract

In an increasingly competitive environment, ensuring organizational sustainability is a priority for both managers and stakeholders. This study investigates the relationship between corporate governance practices and financial distress in manufacturing firms listed on the Pakistan Stock Exchange. The research examines four core governance variables including board size, board independence, audit committee size, and CEO duality using regression analysis to assess their impact on financial distress. The findings of the study reveals that board size has a positive and statistically significant relationship with financial distress, indicating that larger boards may increase the risk of instability. By contrast, the effects of board independence, audit committee size, and CEO duality, though directionally consistent with theoretical expectations, were found to be statistically insignificant in most of the model. These results suggest that governance mechanisms may operate differently considering an emerging market, where institutional and regulatory frameworks shape their effectiveness. The study presents the importance of contextualizing governance reforms to local market realities, rather than assuming uniform effects across contexts. Through clarifying the influence of governance in financial resilience, this research contributes to ongoing debates in corporate governance literature and demonstrate practical insights for regulators, investors, and policymakers seeking to strengthen oversight frameworks in Pakistan and similar emerging economies.