Abstract

This paper presents a relationship between governance quality and mutual fund performance based on non-financial sectors data in Pakistan. It takes into consideration five critical indicators of governance; they include control of corruption, government effectiveness, regulatory quality, rule of law and voice and accountability. Our main regression approach is the OLS estimation model and the robustness of the main regression results is tested by FGLS regression. Results indicate that, except control of corruption, all the indicators of governance have significant positive effects on fund performance. Macroeconomic controls such as GDP, openness of trade, KSE-100 index and COVID-19 are also present in the study. The findings indicate the presence of acceptable governance, which strengthens transparency, investor confidence, and efficacy of funds in emerging economies.