UTJECAJ OBITELJSKOG VLASNIŠTVA NA INVESTICIJSKE ODLUKE: KOMPARATIVNA ANALIZA OBITELJSKIH I NEOBITELJSKIH TVRTKI KOJE KOTIRAJU NA BURZI U KARACHIJU (PAKISTAN)

The current study attempts to investigate the impact of family ownership structure on investment decisions of firms listed at the Karachi Stock Exchange (KSE) of Pakistan. For distinguishing family owned business (FOB) from non-family (NFOB), two threshold points of ownership structure (25% & 50%) were used. Panel data forms ranging from the period 2002-2013 were collected from different sources such as annual reports of firms, Financial statements, business recorder, stock exchanges, telephone calls, emails and balance sheet analyses of joint stocks. Generalized Method of Moments (GMM) was applied to estimate the coefficients of variables of interest. Empirical results revealed that there was stronger positive impact of cashflow on investment in NFOBs in comparison with FOBs. Conversely, family firms have lower investment-cashfl ow sensitivity even when blockholder’s effect was taken in consideration. The estimated coefficients confirmed less investment-cash flow sensitivity in those firms comparatively where professional manager serves as a chief executive officer (CEO). It was also revealed that family firms alleviate financial constraints as well as free cash flow problems. It was concluded that broader investment horizons, corporate governance mechanism and flexibility to manage financial constraints make family firms capable of reducing investment-cash flow sensitivity.Cilj ovog rada je istražiti utjecaj obiteljske vlasničke strukture na investicijske odluke poduzeća koja kotiraju na burzi u Karachiju (Pakistan). Kako bi se razlikovala obiteljska od neobiteljske vlasničke strukture, u radu su korištena dva praga u vlasničkoj strukturi (25% i 50%). Panel podaci iz razdoblja 2002.-2013. prikupljeni su iz različitih izvora poput godišnjih izvješća poduzeća, financijskih izvješća, business recordera, s burzi, putem telefonskih razgovora, elektroničkom poštom te analiziranjem bilanci dioničkih društava. Uopćena metoda momenata (Generalized Method of Moments - GMM) primijenjena je na procjenu koeficijenata varijabli od interesa. Empirijski rezultati otkrili su kako postoji jači pozitivan utjecaj novčanog tijeka na ulaganje u neobiteljskim tvrtkama od obiteljskih. Suprotno tome, obiteljske tvrtke imaju slabiju osjetljivost u odnosu između ulaganja i novčanog tijeka, čak i kad se uzme u obzir utjecaj velikih ulagača. Procijenjeni koeficijenti su potvrdili slabiju osjetljivost u odnosu između ulaganja i novčanog tijeka u tim poduzećima s obzirom na ona u kojima profesionalni menadžer djeluje kao glavni izvršni direktor (CEO). Također se pokazalo da obiteljske tvrtke ublažavaju financijska ograničenja i probleme slobodnog novčanog tijeka. Zaključak je da širi ulagački vidici, mehanizmi korporativnog upravljanja i fleksibilnost u upravljanju financijskim ograničenjima mogu omogućiti obiteljskim tvrtkama da umanje osjetljivost u odnosu između ulaganja i novčanog tijeka

Ownership structures as determinants of financial decisions: evidence from Pakistani family owned listed firms

The current study aims to inspect the investment policy as well as financing policy with respect to ownership structure. Two threshold points of ownership structure (25% & 50%) were used to distinguishing family owned business (FOB) from the non-family (NFOB) ones. The data sample of 280 listed firms at Karachi Stock Exchange (KSE) was collected from different sources like annual reports, financial statements and balance sheet analyses ranging for the period 2002-2013. Among many advance econometric techniques, Generalized Method of Moments (GMM) was found appropriate to estimate the coefficients of variables. The empirical results showed that the FOBs had lower investment-internal fund sensitivity than NFOBs. However, the blockholder’s effect on investment-internal fund sensitivity was found statistically insignificant. Furthermore, the weak application of Pecking Order Theory and higher payout ratio in FOBs as compared to NFOBs were revealed. Also, It was concluded that the lower agency and information asymmetry problems in FOBs comparatively

Effect of Corporate Governance Index on Dividend Policy: An Investigation of Textile Industry of Pakistan

This study empirically observes the impact of corporate governance index on dividend payout policy by using the data on thirty textile firms listed at Karachi Stock Exchange. The data cover the five-year period from 2009 to 2013. The data were gathered from financial statements of all the sample firms. Multiple regression models were used to check the impact of corporate governance on dividend policy. No effect of corporate governance index on firm dividend policy was found, and the largest shareholders also had no impact on dividend payout policy. A significant positive relationship was found between payout policy and stock value. Gross profit margin and operating profit margin had significant positive impact on the firm’s dividend payout policy. There is a significant correlation between the firm’s performance and payout policy

The Corporate Governance Paradox: A Comparative Analysis of Multinational and Domestic Manufacturing Firms in Pakistan

There are two commonly held views on the quality of corporate governance and profitability of multinational corporations operating in the developing countries. The first view states that the quality of corporate governance practiced by multinational corporations is generally higher than that of domestic companies. The second view postulates that multinational corporations show better financial performance than domestic companies. An inference that can reasonably be drawn from these two views is that there is a positive relationship between the quality of corporate governance and financial performance of firms. The converse side of this coin is that domestic companies have lower profitability due to the poor quality of their corporate governance. But our research into the quality of corporate governance in multinational corporations and domestic companies operating in Pakistan and their respective financial performances divulges an interesting departure from these pervasive inferences. Looking at the issue with a slightly different angle, this paper examines the impact of firms’ location on its corporate governance quality and ultimately their profitability. Our results show a strong positive relationship between firms’ location and financial performance; but they indicate that the quality of corporate governance is better in domestic firms than multinational corporations. Another surprising revelation is a negative and insignificant relationship between corporate governance index and financial performance of domestic firms. We are inclined to deduce that multinational corporations owe their superior financial performance not to the quality of their corporate governance but to other factors not covered by the present research