Abstract
This study examined the corporate governance-financial constraints relationship in the context of agency cost, information
asymmetry, and corporate voluntary disclosure. A large sample of Pakistan Stock Exchange (PSX) listed firms during the period
2010-2018; we have covered audit committee, board structure and ownership structure as board governance mechanism to
investigate its possible association towards financial constraints measures through KZ Index. We have also investigated the
possible impact of financial variables on financial constraints. By employing random effect logit model, we concluded that cash
flow and free flow have fundamental to relieve firm from financial constraint. Among governance variables board participation,
family, foreign, institutional and concentrated ownership shows significant relationship towards financial constraints. The findings
suggest that there is a need to strengthen the role of an audit committee and board structure mechanism in mitigating agency cost,
and information asymmetry and improving disclosure that indirectly save firm from financial constraints.
Muhammad Farooq, Amna Noor. (2020) The Impact of Corporate Governance on Financial Constraints: Evidence from Pakistan, Paradigms , Vol 14, Issue 1.
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