The Affect of Corporate Governance on Firm's Performance and Credit Rating: Evidence from Pakistan
The opening paragraphs of this proposal are plagiarized:
THIS was the original submission:
1. Introduction
Increasingly policy makers around the globe have come to believe that there is a strong relationship between corporate governance and economic growth by enhancing the overall performance and creditworthiness of companies. In an emerging economy such as Pakistan, corporate governance since the late 1990s has been the central policy issue in the debate. It reduces exposure of the financial crises and /or institutional failure, reinforcement property rights; decreases transaction cost and cost of capital and leads to capital market development. Corporate governance concerns the relationship among the management, board of directors, controlling shareholders, minority shareholders and other stakeholders.
Recently in 2002, Securities Exchange Commission of Pakistan (SECP) has directed for the purpose of establishing a framework of good corporate governance whereby a listed company is managed in compliance with best practices and in exercise of the powers. The motives for planned corporate governance was to improve the overall governance practices firstly, through quality and independent board of directors and secondly improved management policies on investor communications. It is the first time that corporate sector is required to implement the corporate governance rules and provide the undertaken of its compliance. It is expected that with the openness and compliance the performance of corporate sector will improve at both individual firm level and at aggregate level.
This second paragraph is copied from the following source:
Corporate Governance and Firm Performance: An Exploratory Analysis, by Rozina Shaheed & Dr. Muhammad Nishat of IBA, Karachi - emails: rshahin@iba.edu.pk and mnishat@iba.edu.pk
I returned this submission to Andleeb with comment that it was plagiarized and therefore would not be evaluated. She re-submitted the proposal, changing the second paragraph to the following:
In 2002, Securities Exchange Commission of Pakistan (SECP) directed to establishing a framework of good corporate governance, to how a listed company managed in compliance with best practices and exercises its powers. The motives for planned corporate governance was to improve the overall governance practices firstly, through quality and independent board of directors and secondly improved management policies on investor communications. It was the first time that corporate sector was required to implement the corporate governance rules and provide the undertaken of its compliance. It is expected that with the openness and compliance the performance of corporate sector will improve at both individual firm level and at aggregate level.
Plagiarism is solved by CITING THE SOURCE -- not by changing "for" & "whereby" to "to". If the ideas are general -- that is they are part of well known history, and not special discoveries of the source -- then they have to absorbed [ That is, they must be understood by the student] and then re-expressed in your own words.
ANOTHER PROBLEM IS THAT THE INTRODUCTION DOES NOT FULFILL ITS PURPOSE: It does not explain what research is planned by the author. The following paragraph, the last paragraph of the intro, does not seem related to anything being said -- why do we mention the Manual and the Four Components? What does it have to do with the research? Is the research going to be about these four components?
The Manual of Corporate Governance (CG) of Pakistan focuses on four major components: Ownership Structure and Influence, Financial Stakeholder Rights and Relations, Financial Transparency and Information Disclosure, and Board Structure and Processes. The Pakistan Credit Rating Agency (PACRA) has taken the qualitative and quantitative factors for rating calculation.
1.1 Motivation
Most of the research in the area of corporate governance is done for developed economies, as rich data is only available for these economies where active market for corporate control exists and the ownership concentration is low (Bohren and Odegaard, 2001). Pakistan like many developing countries is characterized by relatively weak investor’s protection and corporate law enforcement. Pakistani market is also characterized by the ownership concentration; cross-shareholdings, pyramid structure and the dominance of family business.
Various studies examined the different issues related with good governance at the macro level [Hijazi (1999), Husain (1999), Qureshi (1999), Shafqat (1999), Shah (1999), Streeten (1999), Tahir (1999) and Chaudhry et al. (2006&2007)]. On the other hand, few studies investigated the relationship of corporate governance on firm performance [ Ghani, et al. (2002), Waqar and Ashraf (2003) , Rais and Saeed (2005), Ashraf and Ghani (2005), Javed and Iqbal (2007) ]. However, there is lack of studies that examine the impact of corporate governance on firm’s credit rating.
Therefore, the main focus of this study is to examine the impact of corporate governance attributes on firm’s performance and credit rating. It also takes into account the endogenous nature of the relation between governance, performance and credit rating. The framework of simultaneous equations is used to describe the relationship among corporate governance attributes, performance and credit rating.
1.2 Contribution
This study makes several contributions to the existing literature on corporate governance: Firstly, although much of the prior literature investigated the impact of corporate governance focus on firm performance, this study investigates the impact of corporate governance on firm’s credit rating. Secondly, examines the impact of firm’s performance on its credit rating. Thirdly, instead of considering just a single attribute of corporate governance, it considers seven different governance attributes. These are board size, Independence of board of director, Board stock ownership, Number of meetings, Female Director, Chief Executive Officer Duality, and Auditor committee independence.