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This study investigates the impact of Shariah governance on the sustainable financial performance of Islamic banks in Pakistan, with insider and institutional ownership examined as moderating factors. Drawing on stakeholder and agency theory, the analysis uses panel data from 22 Islamic banks over the period 2014–2023, applying ARDL models, correlation, and Granger causality tests. Performance was assessed from three perspectives: management efficiency (ROAA), shareholder returns (ROAE), and market valuation (Tobin’s Q). The results reveal that strong Shariah governance enhances operational and shareholder performance but has limited influence on market valuation, suggesting that investors may undervalue governance quality. Insider ownership shows mixed effects, aligning managerial incentives with shareholders yet undermining market confidence, while institutional ownership consistently strengthens governance performance linkages. These findings highlight the importance of substantive, rather than symbolic, Shariah governance and balanced ownership structures in driving long-term sustainability. The study offers practical insights for regulators, managers, and investors as Pakistan transitions toward a fully interest free financial system.

Keywords: Performance, Shariah Governance, Corporate Governance, Banks, Islamic.