Two Tier Corporate Governance Model for Pakistan

European Journal of Business and Management
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 4, No.6, 2012

www.iiste.org

Two-Tier Corporate Governance Model for Pakistan
Safdar Hussain Tahir1* Hazoor Muhammad Sabir2 Adnan Arshad1 Muhammad Anwar ul Haq1
1.

Department of Banking & Finance, Government College University, Faisalabad, Pakistan.

2.

Department of Economics, Government College University, Faisalabad, Pakistan.

* E-mail of the corresponding author: [e-mail]

Abstract
The main purpose of this study was to formulate a model of corporate governance suitable for the Pakistani environment. For this the corporate governance models like Anglo-US, German and Japanese working for the companies of developed and developing nations were critically reviewed. After studying the pros and cons of these models, a hybrid model for Pakistani companies was proposed. According to this model, twotier boards’ i.e. supervisory board and management board have been suggested instead of one-tier board.
Entire supervisory board will be comprised of non-executive directors (NEDs) whereas management board will consist of only executive directors (EDs). These boards will together constitute a joint board headed by a chairman (an INED) who will also head the supervisory board and management boards. Supervisory board will conduct its affairs with the help of subcommittees. The hybrid model would aim to fill the board room in the sense of ensuring the balance of representation, talents, power and attitude which is the prime source of poor corporate governance in Pakistan.
Keywords: Corporate Governance, Two-tier boards, hybrid CG model, Pakistan

1. Introduction
Corporate governance is a way of governing activities of a corporation for the well being of all stakeholders
(not only for shareholders) that ultimately leads to better financial performance. It is the set of process, customs, policies, laws, and institutions affecting the way

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