https://ijbea.com/ojs/index.php/ijbea International Journal of Business and Economic Affairs. DOI: 10.24088/ijbea. ISSN: 2519-9986(Online). ISSN: 2520-3258(Print). Abbreviated key title: Int. j. bus. International Journal of Business and Economic Affairs en-US International Journal of Business and Economic Affairs 2520-3258 https://ijbea.com/ojs/index.php/ijbea/article/view/421 <p>With a focus on the mediating function of financial reporting quality (FRQ), this study investigates how corporate governance (CG) shapes investment efficiency (IE) of nonfinancial enterprises listed on the Pakistan Stock Exchange (PSX) from 2013 to 2023. Effective CG practices greatly improve IE, according to a study using a sample of 200 enterprises and strong hypothesis testing with the Generalized Method of Moments (GMM) that addresses the issue of endogeneity and unabsorbed heterogeneity. Additionally, the study shows that accurate and transparent financial reporting is crucial for making the best investment decisions and that first-class reporting of financial information plays a crucial mediating role in this relationship. Control factors such as business size, leverage, firm age, and financial slack are incorporated into the research to guarantee thorough results. The findings broaden our understanding by illustrating how FRQ plays a mediating function in the relationship between CG and IE and how CG and FRQ cooperate to enhance IE. CG significantly affects FRQ, and FRQ affects IE. Studies offer useful advice for corporate managers and policymakers.</p> Arshad Javed Younas Iqbal Qazi Copyright (c) https://creativecommons.org/licenses/by-nc/4.0/ 2024-10-10 2024-10-10 9 4 1 11 10.24088/IJBEA-2024-94001