Corporate Governance and Sustainability Review/ Volume 2, Issue 2, 2018 6 CORPORATE GOVERNANCE AND VALUE OF FAMILY-OWNED BUSINESS: A CASE OF EMERGING COUNTRY Sabeen Sikandar * , Waqas Mahmood ** * Corresponding author Institute of Business Management (IoBM), Pakistan Contact details: Institute of Business Management, Korangi Creek, Karachi, Sindh, 75190 Pakistan ** Institute of Business Administration (IBA), Pakistan Abstract How to cite this paper: Sikandar, S., & Mahmood, W. (2018). Corporate governance and value of family-owned business: A case of emerging country. Corporate Governance and Sustainability Review, 2(2), 6-12. http://doi.org/10.22495/cgsrv2i2p1 Copyright © 2018 by Virtus Interpress All rights reserved The Creative Commons Attribution- NonCommercial 4.0 International License (CC BY-NC 4.0) will be activated starting from February, 2019 followed by transfer of the copyright to the Authors ISSN Online: 2519-898X ISSN Print: 2519-8971 Received: 01.05.2017 Accepted: 27.07.2018 JEL Classification: L25, L32, G30, G34, G38 DOI: 10.22495/cgsrv2i2p1 The article focuses on analyzing the relationship between practices of corporate governance in family-owned firms that are listed in Pakistan Stock Exchange (PSX) with their value (firm value). Nearly 70% of listed cement companies are family-owned. The cement industry in Pakistan is in boom phase because of international construction projects in collaboration with China, China-Pakistan Economic Corridor (CPEC). Moreover, family-owned firms have a long history of contributing their best towards Pakistan’s economy since inception after the independence. The firm’s market value is an indicator of overall performance and health of the firm. This paper uses data from annual reports of the firms from 2013-2017, including corporate governance metrics like board size, board composition and composition of the audit committee. The dependent variable firm value has calculated using Tobin’s Q. The analysis involves panel least squares method using Eviews9. Results indicate a positive relationship between firm value and corporate governance metrics, and closely consistent with a number of researches in the similar geographical framework. It has been however recommended for future researchers to have a deeper view of a firm’s performance metrics in the cement industry keeping in view the gigantic projects upcoming. Keywords: Firm Value, Corporate Governance, Pakistan, Cement Sector, Family-owned Firm 1. INTRODUCTION Corporate Governance (CG) is meant to provide fair welfare to the interests of the stakeholders. This is because CG predominantly contests fraudulent activities within or by the corporates. Whether it is the firm owners or the shareholders, CG provides a transparency between the two. CG controls and monitors how corporates are being ruled and operated; specifically when an organization is a publically listed company (Balachandran & Faff, 2015). A number of amendments are recorded in the recent Companies’ act of Pakistan, 2017, which are supposed to strengthen CG practices in the region. The following research is aimed at investigation, analysis and study of the relationship between CG practices (board size, board composition, the composition of audit committee) (Azhar & Mahmood, 2018) and firm valuation specifically of the listed family-owned firms in Cement sector of Pakistan. These days, corporate governance is one of the areas where researchers are globally taking much interest. The practitioners, regulatory bodies and the general public, therefore, are much concerned regarding the developments in CG. The corporate financial scandals, like that of Enron, were the turning point for the corporate regulations & practices worldwide. Enron Corporation was an American energy firm, founded in 1985. Due to the misrepresentation of billions of US dollars in financial reports, the corporation was able to hide the failures and disgrace in several projects and deals. Also, the audit firm was pressurized to conceal the financial ambiguities in these reports; on the revelation of which, the stakeholders had filed a lawsuit. The stock price of Enron Corporation thus dropped to USD 1 from over USD 90. As a result of which, the codes of corporate governance were first introduced to the World in 1999, by the Organization for Economic Cooperation & Developments (OECD); which had caught the interest of the listed firms, their stakeholders, regulatory authorities in the Governments and policy makers. This helped in