ARTICLE

INSTITUTIONAL DETERMINANTS OF FIRM PERFORMANCE EVIDENCE FROM PAKISTAN

  1. HOME
  2. ARTICLE

21 Pages : 271 -284

http://dx.doi.org/10.31703/grr.2016(I-I).21      10.31703/grr.2016(I-I).21      Published : Dec 2016

Institutional Determinants of Firm Performance: Evidence from Pakistan

Abstract

    Owner structure (OS) is an imperative feature of a firm and firm performance (FP). Recent studies have debated the effect of OS and FP around the world. Studies argue that OS is one of the important factors of decision making since principals expect wealth maximization while agents try to increase their personal gains. However, investor protection (IP) adds to the decision making with regards to OS since IP ensures that shareholders finds shall not be expropriated and that IP enhances the trust of all stakeholders and help in making informed decision. Based on this premise, we investigate the effect of OS on FP in the presence of IP. Using secondary data from Pakistans capital market for the years 2008-2015 and applying panel data techniques, we find that not only OS affects FP but the interaction term of IP and OS also has a significant on FP. These results indicate that capital markets in developing countries rely more on OS since it ensures that managers do not expropriate investors funds and thus make informed decisions.

    Ownership Structure, Managerial Ownership, Institutional Ownership, Tobin's Q, Leverage

    (1) Adnan Ahmad
    Assistant Professor,IBL, Abdul Wali Khan University, Mardan, KP, Mardan.
    (2) Muhammad Ilyas
    Lecturer, IBL, Abdul Wali Khan University,Mardan, KP, Pakistan.
    (3) Saima Urooge
    Assistant Professor,Department of Economics, Islamia College University, Peshawar, KP, Pakistan
Fulltext PDF

References

  • Agrwal, A., & Knoeber, C. R. (1996). Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Financial and Quantitative Analysis, 377-397.
  • Alfaraih, A. A. (2012). The Influence of Institutional and Government Ownership on Firm Performance evidence from kuwait. International Business Research, 192-200.
  • Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: evidence from the S&P 500. The journal of finance, 58(3), 1301-1328.
  • Berle, & Mean. (1932). The modren copration and private property. Transaction publisher.
  • Conyon, & Thomsen. (2012). Corporate governance. McGraw Hills
  • Cornett, M. M., Marcus, A. J., Saunders, A., & Tehranian, H. (2007). The impact of institutional ownership on corporate operating performance. Journal of Banking & Finance, 31(6), 1771-1794.
  • Cornett, M. M., Marcus, A. J., Saunders, A., & Tehranian, H. (2007). The impact of institutional ownership on corporate operating performance. Journal of Banking & Finance, 31(6), 1771-1794.
  • Daraghma, Z., & Alsinawi, A. A. (2010). Board of Directors, Management Ownership, and Capital Structure and its Effect on Performance: The Case of Palestine Security Exchange.
  • Demsetz, H., & Lehn, K. (1985). The structure of corporate ownership: Causes and consequences. Journal of political economy, 93(6), 1155-1177.
  • Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7-8), 1034-1062.
  • Jensen, M. a. (1976). theory of firm,managerial behaviour agency cost and ownership structure. journal of financial economics, 305-360.
  • Kadivar, A. (2006). the principles of corporate governce. economics journal of iran, 25-29.
  • leland, & Pyle. (1977). Informational asymmetries, financial structure, and financial intermediation. Journal of Finance , 371-387.
  • Mande, C. A. (2003). Does ownership structure influence firm's value? evedence from India. journal of strategic management, 03.
  • Maug. (1998). Large shareholders as monitors. Journal of finance, 65-98
  • McConnell, & Servaes. (1990). Additional evidence on equity ownership and corporate value. journal of financial econoics(27), 595-612.
  • Meckling, J. A. (1976). Theory of the firm: Managerial Behavior, Agency Costs and ownership structure. journal of financial economics, 3, 305-360.
  • Morck, R., Shleifer, A., & Vishny, R. W. (1988). Management ownership and market valuation: An empirical analysis. Journal of financial economics, 20, 293-315.
  • Thomsen, S., & Pedersen, T. (2000). Ownership structure and economic performance in the largest European companies. Strategic Management Journal, 21(6), 689-705.
  • Pound, J. (1988). Proxy contests and the efficiency of shareholder oversight. Journal of financial economics, 20, 237-265.
  • Raji, I. (2012). Effects of ownership structure on the performance of listed companies on the Ghana stock exchange (Doctoral dissertation)ss.
  • Shleifer, A., & Vishny, R. W. (1986). Large shareholders and corporate control. Journal of political economy, 94(3, Part 1), 461-488.
  • Stulz. (1988). managerial control of voting rights. journal of financail economics, 25-54.
  • Demsetz, H., & Villalonga, B. (2001). Ownership structure and corporate performance. Journal of corporate finance, 7(3), 209-233.
  • Wheelen, T. L., & Hunger, J. D. (1986). Strategic management and business policy. Addison-Wesley.
  • Zhuang. (1999). Some conceptual issues of corporate governance. In Zhuang, Some conceptual issues of corporate governance.

Cite this article

APA

CHICAGO

    CHICAGO : Ahmad, Adnan, Muhammad Ilyas, and Saima Urooge. 2016. "Institutional Determinants of Firm Performance: Evidence from Pakistan." Global Regional Review, I (I): 271 -284 doi: 10.31703/grr.2016(I-I).21

HARVARD

    HARVARD : AHMAD, A., ILYAS, M. & UROOGE, S. 2016. Institutional Determinants of Firm Performance: Evidence from Pakistan. Global Regional Review, I, 271 -284.

MHRA

    MHRA : Ahmad, Adnan, Muhammad Ilyas, and Saima Urooge. 2016. "Institutional Determinants of Firm Performance: Evidence from Pakistan." Global Regional Review, I: 271 -284

MLA

    MLA : Ahmad, Adnan, Muhammad Ilyas, and Saima Urooge. "Institutional Determinants of Firm Performance: Evidence from Pakistan." Global Regional Review, I.I (2016): 271 -284 Print.

OXFORD

    OXFORD : Ahmad, Adnan, Ilyas, Muhammad, and Urooge, Saima (2016), "Institutional Determinants of Firm Performance: Evidence from Pakistan", Global Regional Review, I (I), 271 -284

TURABIAN

    TURABIAN : Ahmad, Adnan, Muhammad Ilyas, and Saima Urooge. "Institutional Determinants of Firm Performance: Evidence from Pakistan." Global Regional Review I, no. I (2016): 271 -284. https://doi.org/10.31703/grr.2016(I-I).21