Performance Of Firms In Pakistan Research Articles

Do Powerful CEOs Benefit Firm Performance in Pakistan?

Manuscript type: Research paper Research aims: This study examines the impact of Chief Executive Officer (CEO) power dimensions on firm performance. Design/Methodology/Approach: A panel data of 110 Pakistani firms listed on the Pakistan Stock Exchange for the period of 12 years (2008- 2019) was analysed using the GMM approach. Research findings: The GMM regression results revealed significant relationships. The analysis suggests that CEOs with considerable structural, ownership, prestige, and expert power tend to exhibit superior performance, as these factors are positively correlated with firm performance. Conversely, CEO family power appears to have no discernible impact on firm performance. Importantly, the robustness of our findings underscores the consistent nature of these relationships. Theoretical contribution/Originality: This study makes a valuable contribution to the existing literature by demonstrating the positive influence of CEO power on firm performance, which aligns with the theoretical framework of the Approach/Inhibition theory of power. The originality of this research stems from its examination of individual dimensions of CEO power and their impact on firm performance, as well as the inclusion of the additional dimension of family power. Practitioner/Policy implication: The insight from this study suggests that powerful CEO leadership is beneficial for firm performance and the concentration of power at the CEO position should be seen positively rather than the negative perspective provided by agency theory.

Exploring the Impact of Ownership Structure and CEO Power on CSR and Firm Performance in Pakistan: A Comparative Study of Pre, Post and Covid Era as an Emerging Economy

The primary purpose of this research is to acquire a profound comprehension of the impacts of Corporate Social Responsibility (CSR) on the operations of firms and on society as a whole, with Pakistan serving as the focal point of the research. This study's objective is to determine whether or not there is a moderating effect of CEO power on the relationships that exist between CSR, ownership concentration, and efficient business practices. In-depth research has been conducted on fifty different non-financial enterprises in Pakistan to see how well they performed before, during, and after the Covid-19 Pandemic. On the data that has been gathered, descriptive statistics and regression analysis have been carried out with the assistance of SPSS. The research found that in the middle of the Covid-19 outbreak in Pakistan, the degree of authority held by CEOs had a major impact on the dynamics of the economy. The authority of the Chief Executive Officer (CEO) has a significant impact on the relationship between corporate social responsibility (CSR) and the performance of an organization. Even in a developing country like Pakistan, the present study highlights the importance of corporate social responsibility (CSR) and the positive influence it may have on the bottom line of a firm. The purpose of this study is to investigate the beneficial benefits that corporate social responsibility (CSR) has on society, with a particular emphasis on emerging countries such as Pakistan. This research serves as a useful guide by emphasising how important CSR is for linking together the success of businesses and the well-being of the society in which they operate.

Exploring the Impact of Ownership Structure and CEO Power on CSR and Firm Performance in Pakistan: A Comparative Study of Pre, Post and Covid Era as an Emerging Economy

The primary purpose of this research is to acquire a profound comprehension of the impacts of Corporate Social Responsibility (CSR) on the operations of firms and on society as a whole, with Pakistan serving as the focal point of the research. This study's objective is to determine whether or not there is a moderating effect of CEO power on the relationships that exist between CSR, ownership concentration, and efficient business practices. In-depth research has been conducted on fifty different non-financial enterprises in Pakistan to see how well they performed before, during, and after the Covid-19 Pandemic. On the data that has been gathered, descriptive statistics and regression analysis have been carried out with the assistance of SPSS. The research found that in the middle of the Covid-19 outbreak in Pakistan, the degree of authority held by CEOs had a major impact on the dynamics of the economy. The authority of the Chief Executive Officer (CEO) has a significant impact on the relationship between corporate social responsibility (CSR) and the performance of an organization. Even in a developing country like Pakistan, the present study highlights the importance of corporate social responsibility (CSR) and the positive influence it may have on the bottom line of a firm. The purpose of this study is to investigate the beneficial benefits that corporate social responsibility (CSR) has on society, with a particular emphasis on emerging countries such as Pakistan. This research serves as a useful guide by emphasising how important CSR is for linking together the success of businesses and the well-being of the society in which they operate.

Types of political connections, election years, and firm performance in Pakistan: Moderating role of external monitoring

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Contribution the Effect of Corporate Governance on Firm Performance in Pakistan

The study investigates the effect of corporate governance on firm performance in commercial banking sector of Pakistan. we have reviewed the previous studies from 1980-2021. In these researches Pakistani banks' financial performance is improved by board size, long-term CEOs, audit committee size, audit committee independence, foreign ownership, institutional possession, annual preferred meeting, and dividend coverage. In order to safeguard shareholders and improve the overall financial performance of the business, the banks have advocated for the adoption of sound corporate governance exercise. Most importantly, by enforcing appropriate endorsements for noncompliance and ensuring compliance with appropriate corporate governance, the regulatory authority ought to encourage the growth of the commercial banks of Pakistan. Beyond the rights and responsibilities of various stakeholders in the management of a company, the study aims to strengthen company governance in other areas, such as the relationship between a company and its finance vendors, compliance with societal demands for felony, ethical, and environmental standards, and others. The study's most significant contribution to knowledge is in this regard. The study compresence the interpretations that have frame corporate governance in relation to the company's overall performance has been significantly enhanced by this contribution.

Corporate income tax, asset turnover and Tobin’s Q as firm performance in Pakistan: Moderating role of liquidity ratio

This article finds the impact of corporate income tax and asset turnover on financial performance of the corporate sector with panel data in Pakistan. Panel data of sixteen non-financial firms listed in Pakistan Stock Exchange during the time period from 2006 to 2021 are used for analysis. Panel data are collected from the Data Services & Innovations Department, State Bank of Pakistan (SBP). The fixed effect model (FEM) estimates are found more appropriate for estimation on the basis of Hausman test. The study utilizes Tobin q as an indicator of firm financial performance. Findings of study explain that corporate income tax effects firm financial performance positively. However, this impact is not significant. Further, the impact of asset turnover is negative and significant. Negative relation is found between liquidity ratio and firm financial performance. It indicates that a lesser amount of liquid assets evade from expensive borrowing. Tax structure is important for firm financial growth and performance. The improvements in corporate tax structure to boost the investment in the corporate sector of Pakistan are recommended. Further, sales of Pakistani firms do not meet the neck and neck of firm’s assets. Firm is advised to improve product quality for its sale promotion and government can play its role in this regard by devising export policy.

The Nexus between Environmental Corporate Social Responsibility Disclosure and Firm Performance in Pakistan

The corporate social responsibility (CS_R) is considered a key factor in the realm of finance and is regarded as an important aspect of investment decision-making. This research aims to look into the impact of the environmental dimension of CS_R disclosure on firm financial performance (F-P) in the Banking sector of Pakistan. This study utilizes secondary quantitative data gathered from published annual reports of publicly traded banks and the official website of the Pakistan Stock Exchange (PSX) from 2010 to 2020. The study applied the fixed effect model (F-E-M) or a random effect model (R-E-M) for analysis purposes, along with some pre-requisite diagnostic tests. The independent variable of the study is the environmental dimension of CS_R, while the dependent variable of the study is firm F-P proxied by return on assets (R-O-A) and return on equity (R-O-E) respectively. Control factors such as business size and debt ratio were also employed in the study. The outcome of the study showed that there is a significant relationship between environmental CS_R and F-P in Pakistan's banking industry. This particular research assists companies in understanding the significance of CS_R disclosure in improving the financial performance of the banking industry. The study's conclusions should have practical applications for firms, governments, financial advisors, and Pakistan's banking industry.

Debt Financing and Performance of Firms in Pakistan

The examination of variables that can affect the profitability of the firms is the main purpose of this study. The aim of this study is to find out the effects of dependent on independent variables thoroughly. Profitability is the dependent variable used in this study and accounts payables, short term debt and long-term debt and the control variables are size, and age of the firms are the independent variables that has been used. For this purpose, the quantitative approach has been used. All the data has been used in this study is collected from the official website of Pakistan Stock Exchange PSX. The result of this study shows that the no other variable has any significant impact on the profitability of firms accept long term debt. This means that the companies should go for equity financing and not for the debt financing. All variables of debt financing that are considered for this study are, short term debt, long term debt and accounts payable suggests that companies should go for equity financing. The control variables of the study do not have any effect on the profitability of the firm but for the SMEs the size of the firms impacts the profitability. The managers of the firms should go for the internal financing for the higher profitability.

The Effect of Financial Leverage, Supply Chain Finance and Liquidity on Firm Performance in Pakistan: A Comparative Analysis of Cement, Textile, Pharmaceutical and Sugar Sectors

The Effect of Financial Leverage, Supply Chain Finance and Liquidity on Firm Performance in Pakistan: A Comparative Analysis of Cement, Textile, Pharmaceutical and Sugar Sectors

Politically connected independent directors are ‘helping hand’ and ‘grabbing hand’ for CSR performance of firms in Pakistan

This study aims to determine the impact of different categories of politically connected independent directors (PCOIDs) on corporate social responsibility (CSR) performance. Furthermore, the study identifies rent-seekers among different categories of PCOIDs. This study uses data on politically connected firms in Pakistan from 2008 to 2017. This study applies a two-step generalised method of moments (GMM) to capture the relationship between the corporate social responsibility performance of the firm and PCOIDs. The overall results suggest that PCOIDs and their category of ex-government officers seem to be non-rent-seekers for CSR performance. While the Ex armed officer’s category of PCOIDs not only serves as social capital for the CSR performance of the firm but also come in ‘helping hand’ and ‘grabbing hand’ scenarios of rent-seeking.

Does trade credit spur performance of the firm: a case study of non-financial firms in Pakistan

PurposeThe purpose of this study is to investigate empirically the trade credit financing as antecedents to firm performance in Pakistan, a transition economy having high level of openness in environment using sample data from firms following Sharia principles using Sharia compliance principles.Design/methodology/approachThis study investigated the significance of the trade credit behavior in influencing financial performance of nonfinancial firms which have adopted Sharia principles in their business activities by incorporating feasible generalized least square estimator technique on panel data model from 2010 to 2020. The variables data was extracted from the Pakistan Securities Exchange website for the period 2010–2020. Meanwhile, this study has also taken into consideration the role of bank size in shaping the relation under consideration.FindingsThe statistical outcomes from the used model support the strong impact of the existence of trade credit in determining a firm’s financial performance. Results also highlight that profitable firms with high involvement in trade credit can boost their performance by optimal utilization of trade credit sources. However, the acquisition of bank loans for firms having no operational needs can disturb their financial health and ultimately threaten performance. This relationship is more evident for large-size firms.Practical implicationsThe given analysis suggests the managers from the corporate sector that before making any arrangements for trade credit, they must have to compare the availability of the financing structure from bank as it offers a strong monetary back for any financial imbalance.Originality/valueBriefly, to the best of the authors’ knowledge, this study would be the first to address the trade credit behavior keeping in view the sample data from firms following Islamic Shariah principles using SAC quantitative approach. Further, the proven analysis demonstrates novel contribution that efficient use of trade credit (based on Islamic Shariah principles) into business activities might strengthen corporate firms’ financial efficiency.

Does tax aggressiveness and cost of debt affect firm performance? The moderating role of political connections

Firms in emerging economies continue to suffer as a consequence of tax evasion, high cost of financing, political interference, weak governance systems, and bureaucratic institutions. In order to understand how these challenges complicate commercial activities, this study examines how tax aggressiveness, cost of debt, and political connections affect firm performance in Pakistan. Unlike previous research, we also explore if political connections moderate the association between (i) tax aggressiveness and firm performance and (ii) cost of debt and firm performance. Our robust empirical analysis reveals that tax aggressive firms have weaker performance while politically connected firms have better performance, ceteris paribus. Further, we find that tax aggressive firms having politically connected board members have better performance as compared to their non-connected counterparts. Similarly, firms with a high cost of debt and politically connected board members have better performance as compared to non-connected firms. Thus, we argue that political connections help connected firms in overcoming the adverse consequences of tax aggressiveness and the high cost of debt through their influence in procuring government projects, subsidies, and other benefits. Therefore, policymakers are advised to restrict politically connected board members from extending favors and concessions to connected firms. We also encourage shareholders to exercise their voting power and monitoring capabilities for mitigating agency problems inherent in politically connected firms.

The Impact of Green Supply Chain Management Practices on Firm Performance: Evidence from Manufacturing Industry

Global climate change, environmental pollution and depleting natural resources have necessitated major changes in the way businesses undertake procurement, manufacturing, operations and provision of goods and services to customers. Therefore, green supply chain management (GSCM) practices have caught the attention of researchers in many different countries. However, the adoption of GSCM practices and their influence on firm performance is still in its early stages. This study examines the influence of GSC determinants on firm performance in Pakistan’s manufacturing industry. Survey data was collected from 317 respondents working at various managerial levels in supply chains from manufacturing firms of Pakistan. Green supply chain management practices were assessed using five variables; ‘eco-design, green purchasing, green information systems, cooperation with customers and green manufacturing’. Multiple linear regression analysis indicated that green supply chain (GSC) initiatives had a significant impact on firm performance. Excluding green purchasing, the remaining four elements of GSC were shown to be statistically significant in predicting firm performance. This study highlights the importance of employing green strategies and practices in supply chains in order to improve overall organizational performance. In addition to practical implications for supply chain related environmental concerns, some directions for future research have also been suggested.

How innovative organization culture affects firm performance in the wake of enterprise resource planning? evidence from energy- and non-energy-sector firms in Pakistan

Rapid globalization during the last few decades has caused many difficulties for firms to survive, sustain, and maximize shareholders’ wealth. The Enterprise Resource Planning (ERP) system provides extensive access to data and upgraded information to achieve the specified objectives. This study examines how Innovative Organizational Culture (IOC) affects firm performance in Pakistan. In doing so, this study collects a comprehensive dataset from 234 high- and medium-level managers working in different sectors across six major cities of Pakistan. We construct several hypotheses and employ Partial Least Squares Structural Equation modeling to test the selected premises. The results reveal that IOC and the benefits of ERP are positively related to firm performance, IOC is also positively associated with the implementation of ERP, and the implementation of ERP is positively related to the benefits of ERP. Regarding mediating relationship among the constructs, this study shows that the implementation of ERP mediates the relationship between IOC and the benefits of ERP and the benefits of ERP mediate the relationship between the implementation of ERP and firm performance. Given that Pakistan has been facing a chronic energy crisis for the last few decades, this study conducts a subsample analysis and divides the sample into two groups—“energy and manufacturing” and “service and non-manufacturing” sector firms. Our robustness tests reveal that the implementation of ERP is positively and significantly related to firm performance only in the subsample of service and non-manufacturing sector firms. In contrast, it is negatively and insignificantly related to firm performance in the subsample of energy and manufacturing sector firms. The findings of this study provide numerous operational insights to managers to adequately emphasize and strengthen IOC to sustain the change management system. Specifically, this study suggests that senior- and medium-level managers should continuously monitor the implementation of ERP and determinedly engage themselves in the team management and communication process to achieve higher firm performance.

The Impact of Export and Diversification on Firm Performance: Evidence from Pakistan

The pursuit of internationalization is an important element for a variety of emerging and transitioning economies in their ongoing reform process, following exhibits of export-led development stories in nations such as China, Singapore, and South Korea. Moreover, firms play a major role in the country’s economy; hence, this study empirically analyzes the impact of export and diversification on the performance of firms in Pakistan. This paper utilizes World Bank enterprise data for Pakistani firms across the whole country for the years 2007 and 2013, it is a panel data comprising 454 firms. The dependent variable for this study is sales per employee that we use as our performance measure and the independent variables are Export in terms of Export intensity and Geographic diversification in terms of an inverse measure named export concentration calculated by the Herfindahl-Hirschman index (HHI). For analysis, this paper utilizes Panel EGLS (estimated generalized least square) and the estimation suggests that exports and diversification both positively and significantly correlated in their respective sample. Nonetheless, there is an endogeneity issue with Panel EGLS and to counter that two-stage Panel EGLS is used with “average days to clear customs” as an instrumental variable (IV). Results show a positive association of exports with firm performance again. However, the diversification variable proved to be exogenous as per the exogeneity bias test, so its IV results are not robust. Thus, the findings indicate that Pakistani firms perform better if they export, thus supporting the learning by exporting hypothesis, in addition to their exports being geographically diversified.

Green Supply Chain Management and Corporate Performance Among Manufacturing Firms in Pakistan

A common perception is lowering the environmental consequences of firms’ supply chain activities is a costly idea that poses a challenge to the corporate world. This study aimed to examine the relationship between green supply chain management (GSCM) and corporate performance among listed firms in Pakistan, using the general panel method of moments (GMM) and ANOVA techniques. At the same time, the Granger causality technique provides robust results. The study focused on manufacturing firms, covering periods from 2009 to 2020. The study engaged a modified balanced scorecard framework to adopt five metrics of corporate performance, namely, gross profit ratio, net profit ratio, customer dimension, learning growth dimension, and efficiency dimension. The study incorporated the two measures of the GSCM initiative and two control variables. The findings from the panel GMM estimates reveal that GSCM positively and negatively impacted the five corporate performance metrics explored. ANOVA results indicate significant differences in customer satisfaction, profitability, and efficiency performance metrics among the top and low GSCM practicing corporations. On the other hand, Granger causality results specify a moderate causal association between GSCM implementation and firm performance in Pakistan. Implying that poor GSCM practice may not yield the expected benefits, instead, conscientious efforts should be put in place to ensure that practicing GSCM initiative should be effectively carried out.

Accounting Policies, Institutional Factors, and Firm Performance: Qualitative Insights in a Developing Country

This study aims to uncover the determinants for the formulation of accounting practices and their impact on firm performance in Pakistan through the lens of institutional theory. Based on a pragmatic approach, this study has collected data from 455 participants and 21 semi-structured interviews have been conducted. Firstly, it is noted that accounting practices can be traced back to the Mughal regime, and subsequently underwent a major development in the British colonial system. Secondly, our results indicate that institutional factors, namely, accounting regulatory framework, political factors, economic factors, cultural factors, and country-specific factors have also played a major role in the development of accounting practices after the creation of Pakistan as a separate state. Finally, this study suggests that the development of accounting practices have a novel contribution towards the performance of firms. This research thus provides a pathway for policymakers in this county to closing the gaps between accounting practices and the policies of the International Accounting Standard Board (IASB). Furthermore, firms can enhance their performance by implementing international accounting standards. This paper helps Pakistan’s regulatory institutions such as the SECP (Securities and Exchange Commission of Pakistan) and SBP (State Bank of Pakistan) in the process of developing new policies. Such decisions are related, but not limited to: attracting foreign investments, economic expansion, and international trade. Furthermore, it provides a pathway for firms to improve their performance. Ultimately, this research fills the gap as concerns international accounting standards by assessing, both empirically and theoretically, the role of various determinants for the formulation of accounting practices and their impact on the performance of firms.

Intellectual Capital, Political Uncertainty and Firm Performance: Evidence from Pakistan

Purpose: This research has examined the impact of Intellectual Capital (IC) on performance of the firms in Pakistan while considering political uncertainty as moderating variable. Value Added Intellectual Coefficient (VAIC) model by Pulic (1998) has been used to calculate IC and its components and ROA is used to measure firm’s performance. Design/Methodology/Approach: The research used secondary data of firms, related to manufacturing sectors, listed in Karachi Stock Exchange-KSE 100 Pakistan for a ten-year period of 2010-2019. Regression Model has been employed to investigate the hypothetical relationship between IC and firm performance. Findings: Results of this paper revealed that CEE and CCE have a significant positive relationship with the financial performance of firms in Pakistan whereas SCE has negative effect on the financial performance of the firms. Furthermore, the findings suggest political instability as a significant moderating variable on the relationship among intellectual capital, its components and firms’ performance. Implications/Originality/Value: The findings suggest that the IC of Pakistani firms is driven by physical and customer capital which implies the need for efficient utilization of physical and relational resources primarily. This research is the first attempt in investigating the relative importance of intellectual capital success of any firm under political uncertainty.

Impact of Shareholders’ Activism on Governance Practices and Firm Performance in Pakistan: A Response for Family Controlled Firms

By taking a sample of 150 non-financial firms listed on PSX, this study has empirically examined the impact of ownership structure on firm performance while considering multiple dimensions. This study employed the system GMM econometric technique to examine the association between ownership structure and firm performance. According to the computed results of the study, family ownership puts a positive and highly significant impact on the market performance of the firm. It has also found a strong and significant relationship between family control and the market value of a firm. Similarly, group affiliation and market performance of the firm have a strong and significant association but in a negative direction. Institutional ownership is significantly related to the accounting and market performance of the firm. Moreover, the joint impact of institutional and family ownership is positively and significantly related to the accounting performance of the firm. Finally, institutional activism is positively and significantly related to the accounting performance of the firm.

Is there any difference between the theory and practice for the association between environmental sustainability and firm performance in Pakistan?

AbstractThis study aims to determine the impact of environmental sustainability (ES) on firm financial performance (FFP). The study also examines the mediation of ES in the relationship between integrated management strategies (IMS) and FFP. By employing the content analysis technique for global reporting initiative (GRI) framework, the study collected desired data from the sustainability, corporate social responsibility, and annual reports of the sample firms (1,275 firm‐year observations) listed on the Pakistan stock exchange (PSX) from 2012 to 2016. The study employed a t‐test, ordinary least square, and generalized least square estimator with the fixed effect and random effect for estimating the hypothesized relationships. The results revealed that the ES and IMS have a significant positive impact on the FFP (ROA & Tobin's Q). Also, it is observed that ES mediates the relationship between IMS and Tobin's Q. Furthermore, it also noted that the results are more striking after addressing endogeneity. Besides using the unique ES index, the study also contributes to the literature and practice by updating the developing countries' key stakeholders, especially Pakistan.