The Effects of Corporate Governance and Sustainable Reporting on Firm Performance: Evidence from Pharmaceutical and Chemical Industries in Bangladesh

Abstract

Purpose: The main objective of this research is to analyse and investigate the relationship between corporate governance (CG) and sustainable reporting (SR) in the firm performance of Bangladesh’s pharmaceutical and chemical industry. Method: This study was meticulously conducted with a rigorous methodology. We gathered a total of 156 observations from companies in the pharmaceutical & chemical sector category listed on Dhaka stock exchange (DSE) from year 2018 to 2023. Our study employed a comprehensive range of testing tools, including descriptive statistics, correlation matrix, regression analysis, and the Jarque-Bera normality test. The firm performance measurement was based on Tobin’s Q and Net income before tax, ensuring the utmost validity and reliability of our research. Results: According to the test results, it has been found that corporate governance and sustainable reporting have a significant positive relation with the firm performance. This implies that a sound corporate governance system, which includes transparency, accountability, and ethical practices, in the company and properly maintaining sustainability, which involves sustainability factors, may help a company to sustain itself in the market. These findings underscore the importance of CG and SR in enhancing firm performance and sustainability. Implications: The implications of this study extend beyond the theoretical realm. Our findings can serve as a practical guide for future research and can empower industry professionals and policymakers in the pharmaceutical and chemical sectors in Bangladesh to make informed decisions, thereby enhancing the practical value of our research.