CORPORATE GOVERNANCE DYNAMICS AND PROFITABILITY IN THE TEXTILE INDUSTRIES OF PAKISTAN AND INDIA: AN EXPLORATION OF KEY VARIABLES AND FINANCIAL LEVERAGE MEDIATION

This study aims to analyze how corporate governance affects the profitability and leverage of textile firms in Pakistan and India. It also explores whether financial leverage mediates the connection between firm profitability and corporate governance. We examined 60 textile companies in both countries, using annual data from 2017 to 2022.To fulfill our goal this study utilizes a dual-phase dynamic panel approach along with a generalized method of moments (GMM) to evaluate how leverage acts as a mediator in the connection between corporate governance and firm performance. The results highlight that in Pakistan, board size (BS), Board independence (BI), and firm size (FS) negatively impact profitability, while board diversity (BD) and firm age (FA) have a positive impact. Board meetings (BM) and expertise (BE) do not affect ROA. Similarly, in India, board size and board expertise negatively influence profitability, while diversity, firm size, and age positively contribute. The role of financial leverage (Fl) as a mediator is evident in Pakistan, whereas India does not show such mediation. These findings offer insights to enhance corporate governance and financial strategies for textile firms in both nations.