Impact of Political Stability and Managerial Ownership on Firm’s Profitability

Abstract

The vibrant business sector is a dynamic segment for Pakistan’s economic development because it offers employment to a larger population of skilled and unskilled labour; creates foreign reserves through exports; and also satisfies local demand for the products. Moreover, the listed companies perform a significant function in the growth of an economy, however, on pragmatic grounds, access to capital is evidenced as a matter of grave concern for the business sector in Pakistan. Moreover, it has been observed that in order to reduce the firms’ agency costs, managerial ownership is utilized. Hence, in this essence, this research investigates the relationship of political stability, managerial ownership, dividends, sales, and total assets with the firm’s profitability in Pakistan during 2013-2017. The findings depict that the variables of political stability, total assets, dividends, and sales, positively and significantly affect the firm’s profitability, while, managerial ownership is insignificantly associated with profitability.