Corporate Governance Reforms in Pakistan: Institutionalisation, contradictions, and unintended consequences

This study examines the process of institutionalisation, contradictions and unintended consequences of Corporate Governance (CG) regulations in Pakistan. Prior studies have mostly focused on outcomes of CG regulations. The ‘process’ centred approach adopted in this study contributes to the CG theory and literature by analysing the development processes of CG regulations and dynamics between different societal levels (i.e. macro and micro) through which CG regulations emerged, developed and were implemented in a specific social context. In doing so, this study has developed a multi-level analytical framework to examine process of institutionalisation, transposition and implementation of CG regulations at three different societal levels i.e. socio-political and economic (SPE) level, organisational field and organisational levels. The analytical framework combines neo-institutional theory, structuration theory and Weber’s axes of tension to provide an understanding of the processes associated with the emergence and development of CG regulations in the context of Pakistan. Empirical data came from forty-one semi-structured interviews conducted at all three levels of analysis, and analysis of documents from published secondary sources between 1995 and 2014. The longitudinal analysis finds that the process of institutionalisation, transposition, and implementation of CG regulations is far from linear and straightforward. Historically well-established political and business families in Pakistan raised strong opposition to the institutionalisation of CG reforms at all three societal levels. This resulted in unintended consequences. CG codes were diluted through compromises made at the SPE level. The regulatory environment at the organisational field level was weakened through political appointments in regulatory institutions. There were symbolic compliance, decoupling, and delisting trend at the organisational level. The analytical framework developed in this study may be used by future studies examining how CG regulations emerged, developed and diffused in other countries.