Performance Of Firms In Pakistan Research Articles

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 at‐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.

Examining the Non-linear Relationship between Corporate Governance and Firm Performance in Pakistan

Examining the Non-linear Relationship between Corporate Governance and Firm Performance in Pakistan

Signifying the relationship between counterproductive work behavior and firm's performance: the mediating role of organizational culture

PurposeOrganizations are facing several challenges in the current challenging business environment. The current study explores how counterproductive work behavior (CWB) affects bio-medical companies' firm performance in Pakistan. The study considers the mediating role of organizational culture and its impact on CWB and a firm's performance.Design/methodology/approachData were collected through a self-administered questionnaire. For data collection, 300 questionnaires were distributed among employees working in biomedical companies. Statistical analysis such as descriptive statistics, Pearson moment correlation and structural equation modeling (SEM) techniques was used to analyze the study variable's relationship and its effect on the firm's performance.FindingsThe study results revealed that CWB and organizational culture significantly influence firm performance directly and indirectly. Moreover, organizational culture partially mediates the relationship between CWB and companies' performance.Originality/valueThe current study plays a significant role in the firm's policy directions. There are limited research and information accessible to biomedical firms in Pakistan. Counterproductive job habits wind up becoming something that significantly affects the firm performance. This research adds to human resource management, corporate management and the business strategy literature.

Sustainability Reporting and Firm Performance: The Demonstration of Pakistani Firms

The nexus between sustainability and firm performance is an area of debate among researchers and academicians. The objective of this study is to examine the level and extent of sustainable financial reporting for non-financial firms in Pakistan and to assess the level of the impact of sustainable financial reporting on firm performance in Pakistan. This study is a novel research work as the sustainability practices are not mandatory in many Pakistani firms. Rather kinds of mix sustainability reporting practices are being practiced. The dilemma still exists whether sustainability practices affect the performance of Pakistani firms positively or not. We collect data from the sustainability reports as well as annual reports of 50 non-financial public limited companies listed in Pakistan Stock Exchange for the period 2013 to 2017. We calculate sustainability reporting index using content analysis procedure based on 42 indicators. The index is based on three subindices, namely, environmental, health and safety, and social indicators. We apply two regression models with a view to ascertain the individual effect of each indicator of the sustainability as well as the composite effect of sustainability reporting index on firm performance. The results confirm positive effects of all three individual indicators as well as the composite form of sustainability reporting index on firm performance. The findings of the study clearly outline the economic relevance for introducing the corporate sustainability reporting practices in corporate strategy.

Ownership, Governance and Firm Performance in Pakistan

Ownership, Governance and Firm Performance in Pakistan

Effect of Macroeconomic Factors on Firms ROA: A Comparative Sectorial Analysis from Pakistan

The effect of firm level factors or industry specific determinants on company performance has been worked on in Pakistan but the researches are mainly focused on textile industries and to an extent agro food industry. This study has been conducted on the effect of macroeconomic factors on firm performance in Pakistan with the focus being on seven industries. 10-year data of 5 companies each in 7 industries in Pakistan (35 companies) was collected through the financial reports, from their official websites. Seven industries were selected the Sugar, Textile, Garments, Automotive, Food, Ceramics and Cement industries. The effect of macro-economic factors like Inflation Rate, Real Effective Exchange Rate, Foreign direct investment and Unemployment Rate, as well as Unit Labor Cost, were assessed on Return on Assets for each industry using separate regressions. The results indicated that inflation was a significant factor in sugar industry whereas labor unit cost and exchange rate significantly contributed to textile industry firm performance. Garment and auto industry firm performance were heavily influenced by inflation and unemployment. Lastly food and cement industry ROA were greatly influence by rate of exchange and FDI. Whereas these macroeconomic factors had very little impact on Ceramic industry. These results can assist managers, company auditors, lenders, and regulatory bodies to identify businesses that will be affected by macroeconomic changes and use this information to improve future performance.

Effect of Macroeconomic Factors on Firms’ ROA: A Comparative Sectorial Analysis from Pakistan

The effect of firm-level factors or industry-specific determinants on company performance has been worked on in Pakistan but the researches are mainly focused on textile industries and to an extent agro-food industry. This study has been conducted on the effect of macroeconomic factors on firm performance in Pakistan with the focus being on seven industries. 10-year data of 5 companies each in 7 industries in Pakistan (35 companies) was collected through the financial reports, from their official websites. Seven industries were selected the Sugar, Textile, Garments, Automotive, Food, Ceramics, and Cement industries. The effect of macro-economic factors like Inflation Rate, Real Effective Exchange Rate, Foreign direct investment and Unemployment Rate, as well as Unit Labor Cost, were assessed on Return on Assets for each industry using separate regressions. The results indicated that inflation was a significant factor in the sugar industry whereas labor unit cost and exchange rate significantly contributed to textile industry firm performance. Garment and auto industry firm performance was heavily influenced by inflation and unemployment. Lastly, the food and cement industry ROA was greatly influenced by the rate of exchange and FDI. Whereas these macroeconomic factors had very little impact on the Ceramic industry. These results can assist managers, company auditors, lenders, and regulatory bodies to identify businesses that will be affected by macroeconomic changes and use this information to improve future performance.

Corporate governance and firm performance in Pakistan: Dynamic panel estimation

The purpose of this research is to analyze the association between corporate governance and firm performance. Specifically, it examines the impact of CEO duality on board characteristics and its relationship with firm performance through dynamic penal estimation. The findings of this research are based on a sample of 191 listed non-financial firms over the period 2004-2014. We document that corporate governance plays a pivotal role in determining the financial performance of firms operating in Pakistan. Consistent with past studies, findings of this research also show some statistical variations among the sampled firms (large and small size). CEO duality compromises the efficiency of board independence. Further, the non-linear relationship of managerial ownership with performance is also depicted through the results of this study. Keywords: Corporate governance, accounting-market based measures, firm performance

Corporate governance mechanisms and firm performance: evidence from the emerging market following the revised CG code

PurposeThis study aims to examine the extent to which board characteristics and ownership structure affect firm performance with specific focus on providing new empirical insights following the revised corporate governance (CG) code 2012.Design/methodology/approachThis study uses a sample of non-financial firms listed on Pakistan Stock Exchange (PSX)-100 index for the years 2011-2014. Firm performance is measured by accounting-based performance indicators (ROA and ROE) and market-based performance indicators (Tobin’s Q and MTB). This study uses multivariate regression techniques including fixed effects model and two-stage least squares (2SLS).FindingsThe findings show that board diversity increases over the two periods (pre-2012 and post-2012), whereas there are cases that companies have not fully complied with the revised CG code 2012 in terms of board independence. In addition, the multiple regression results show that firm performance is negatively and significantly associated with institutional ownership. Nevertheless, the results show that board size, board independent, board diversity and board meetings do not have significant impact on firm performance. The findings are fairly consistent and robust across two periods (pre-2012 and post 2012) and a number of econometric models that sufficiently address the potential endogeneity problems.Originality/valueTo the best of the authors’ knowledge, this is the first empirical study which investigates the impact of the compliance and implementation of 2012 CG code on firm performance in Pakistan. This study is different from the most prior studies in that they use independent non-executive directors rather than conventional non-executive directors to measure board independence.

Ownership Concentration, Dividend Policy and Firm Performance in Pakistan

Data is drawing from a sample of Chemical firms listed at Karachi Stock Exchange of Pakistan over the period 2002–2017, this paper investigates the relationship between ownership concentration and dividend policy on firm financial performance. Using panel data analysis, the evidence is found to support the assumption of a significant relationship between ownership concentration and dividend policy on firm financial performance. The findings reveal that ownership concentration has a significant positive association with firm financial performance. This stated that larger shareholders can attribute to the alignment of managerial incentives with shareholder interests. They also monitor the team very effectively and efficiently. Dividend policy has a significant positive relationship with ROA. Leverage and Tangibility have a significant negative relationship with financial performance. Board size also has a significant positive impact on firm performance. These results potentially can be relevant for policymakers and academic research. Keywords: Firm’s Performance, Ownership Concentration, Dividend Policy, Chemical Sector, Pakistan DOI : 10.7176/RJFA/10-21-04 Publication date: November 30 th 2019

CEO Compensation and Unobserved Firm Performance in Pakistan

CEO Compensation and Unobserved Firm Performance in Pakistan

Influence of Porter’s Diamond Cluster on Pakistan Automotive Industry’s Performance

The purpose of this study was to conduct a theory based contextualization of Porter’s diamond related and supporting industries determinant and investigate the influence of clusters, fostering knowledge and innovation, on the performance of automotive firms in Pakistan. In this empirical study the research methodology entails applying axiology of positivism philosophy, self-administered structured questionnaire after pilot study. The research design was cross-sectional, probability technique was constructed in data collection; data analysis was performed by descriptive and inferential statistics. Hypothesis was tested through regression model. Size of sample was 194. The study findings noted absence of empirical research on Porter’s diamond in Pakistan in the automotive industry. Related and supporting industries of Porter’s diamond attribute have theoretical and conceptual perspective to provide impetus for firms in automotive industry to realize competitive advantage (CA). The study findings conclusively confirmed the determining force of clusters of related and supporting industries and its significant impact on the performance of the auto sector in Pakistan. The study investigated the automotive industry across multinational corporations (MNCs), private companies and joint ventures (JV). Practical implications are significant for constituencies like practicing managers, academia, and government policy makers. The research study is important owing to its conceptual and practical perspective for industry players and policy makers to help this key large scale manufacturing industry to realize CA by internalizing the related and supporting industries determinant of Porter’s diamond. Keywords : automotive industry, clusters, competitive advantage, national competitive advantage, related and supporting industries. DOI : 10.7176/EJBM/11-19-05 Publication date :July 31st 2019

The Impact of Cost Leadership Strategy and Financial Management Control Systems on Organizational Performance in Pakistan’s Services Sector

This study gauges the impact of cost leadership strategy and financial management controls on financial performance of firms in Pakistan’s services sector. Drawing on a sample of banking, insurance and investment firms listed on the Karachi Stock Exchange, we find that cost leadership strategy and financial management control systems have a significant and positive impact on financial performance. This implies that both factors should be aligned in the long term.

Impact of Excess Control, Ownership Structure and Corporate Governance on Firm Performance of Diversified Group Firms in Pakistan

This paper attempts to explore the effect of excess control, ownership structure and corporate governance on firm performance in Pakistan. The study takes a sample of 184 non-financial sectors' group firms listed on the Karachi Stock Exchange (KSE) covering a period from 2004 to 2012. The multiple regression models are applied using panel data framework to test the significance of relationship. The results are consistent with the findings of the prior studies conducted in both advanced and emerging economies. The results show that firm ownership is a strong influential factor in affecting firm performance in Pakistan. Both inside ownership and ownership concentration are negatively related to firm performance consistent with divergence of interest effect and entrenchment effect. However, inside ownership squared is strongly positively related to firm performance indicating that inside ownership beyond a certain threshold level started to influence firm performance positively consistent with incentives effect. Ownership disparity affects strongly negatively the financial performance of group firms consistent with the divergence of interest effect. Institutional ownership contributes positively towards firm performance. Noticeably, board independence and outside block holdings play a significantly positive role in affecting financial performance of the group firms in Pakistan. The results show strong evidence that ultimate controllers in group firms use complex ownership and pyramidal structures to extend their ultimate control over many firms with least cash flow rights. The higher the divergence between ownership and control, the greater the potential of the ultimate controllers exerted their entrenched behavior in group firms. These results highlight the internal corporate governance problems faced by the group firms and suggest the need for strengthening the corporate governance mechanism in Pakistan.

Impact of dividend policy on shareholders wealth and firm performance in Pakistan

In the field of corporate finance the question as to whether dividend policy affects the shareholders wealth still remains unresolved. The objective of this research paper is to establish the impac...

The Impact of Ownership Structure on Firm Performance

The connection between ownership structure and firm performance has attracted much attention, especially in emerging markets, yet yielded many inconsistent empirical results. This paper presents an analysis of the association between eight categories of ownership, HHI Index, GINI index and firm performance in Pakistan. Some researchers argue that ownership concentration can improve firm performance by making the owners more willing or able to monitor agents. In contrast, others argue that in the presence of efficient markets, market monitoring will discipline the managers. The author's results show that there is significant positive association with ownership structure and market based performance measure and economic profit. The ownership proportion of the institutional shareholding and foreign shareholding are also positively associated with firm performance. JEL Code: G32.

Effects of ownership concentration on firm performance: Pakistani evidence

Purpose– This paper aims to present an analysis of the association between five categories of concentrated ownership and firm performance in Pakistan. The connection between high ownership concentration and firm performance has attracted much attention, especially in emerging market, yet yielded many inconsistent empirical results.Design/methodology/approach– Karachi Stock Exchange (KSE)-100 Indexed companies listed in KSE from 2007 to 2011 were selected as the sample, and correlation coefficient and regression model were used to inspect the relationship between ownership concentration degree and corporate performance.Findings– It was found that there is no significant association with ownership concentration and accounting-based performance, market-based performance measures and economic profit, in general.Originality/value– The first demonstration that the shareholding proportion of the single largest shareholder is the only variable having positive association with market-based performance measures.

Corporate Governance and Firm Performance in Pakistan: The Case of Karachi Stock Exchange (KSE)-30

This paper examines the relationship between four important corporate governance mechanisms (board size, board composition, CEO/chairman duality and audit committee) and two firm performance measures (return on equity, ROE, and profit margin, PM), for a sample of 30 Pakistani listed firms between 2008 and 2009. The results provide evidence of a positive significant relationship between ROE and PM and three corporate governance mechanisms (board size, board composition and audit committee). The implication of this is that, the board size should be limited to a sizeable limit and board must be a right mixture of executive and non-executive directors. The study, however, could not provide a significant relationship between the two performance measures (ROE and PM) and CEO/Chairman duality. These results are consistent with prior empirical studies.

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