Review of Long-Run and Short-Run Relationship between Macroeconomic Variables and Stock Prices in Pakistan

The purpose of this study is to describe the relationship between stock returns and macroeconomic variables. In this review paper we write the review of fourteen papers related to the relationship between stock returns and macroeconomic variables. However different papers shown different results but we tried to summarize these results in best manner. Two long run relationships were found. In the long run inflation has a negative relationship with stock returns but industrial production index, real affective exchange rate, and money supply has a positive relationship with stock returns. Keywords: Stock returns, macroeconomic variable

A Review of Impact of Interest Rate Spread on Profitability

The purpose of this study is to explain the relationship between interest rate spread and profitability. Interest rate spread is actually the difference between deposit rate and lending rate of bank. Interest rate spread is an important factor in profitability of banks. It means increase or decrease in interest rate will affect profitability. Many other factors also contribute in the profitability of banks. The growth of any organization depends on its profitability. When the profitability of any organization increases the value of shareholders also increase. Keywords: Interest rate spread, Profitability, Ban

Effective Management and Its Impact on Growth of Small and Medium Sized Pakistani Firms

The study is held to observe the impact of Management including Management levels and decision making on the growth of small firms. Study area is Punjab (Pakistan). Small firms have no proper firm structure; they do not follow the formal rules to run the organization. Inspite of this, these firms are growing rapidly. If these firms have effective management levels and rational decision making than the firms will grow rapidly. The results show a significant increase in growth by using rational decision making and having effective management levels. Statistical results show that if we spend 1% on independent variable, then it shows an 80% increase in dependent variable. Keywords: Small firm; Management; Growth; Decision makin

Role of Corporate Governance to Mitigate the Idiosyncratic Risk in Non-Financial Sector of Pakistan

The primary focus of this study is on the relationship between idiosyncratic risk and corporate governance. A secondary focus of the study is on the relationship between firm performance and corporate governance. Then, a potential corporate governance-to-idiosyncratic volatility-to-firm performance link is considered. In this study, corporate governance is approached in the context of internal governance control, based on board structure, composition, ownership, ownership structure, audit committee structure and quality. These are the essential elements of corporate governance, and relevant for studies pertaining to a market with internal-governance characteristics, such as the Pakistan market. The market of Pakistan provides a unique study that is based on market with its distinct characteristics. It is the market with internal-governance-control characteristics that operates in an internal-governance-control system. Therefore, this study has applied data draw form firms listed under the aforementioned of the Pakistan Securities Exchange (PSE). The data used in this study are taken from the PSE, the 104 listed firms for the year’s 2004-2016. The primary conclusion of the study is that there is a clear relationship between idiosyncratic risk and corporate governance. Specifically, this study finds consistent and significant relationship between idiosyncratic volatility and a number of firm-level corporate governance variables. The variables include among others, CEO duality, firm size and leverage. Thus, based on these conclusions, a link between corporate governance, idiosyncratic volatility, and firm performance is implied. The results show that the firms with batter corporate governance mechanisms tend to have a lower idiosyncratic risk. The current studies differ from previous studies on idiosyncratic risk, and also previous corporate governance studies, in its focus on a relationship between idiosyncratic and corporate governance in the context of internal governance controls, and the significant finding and conclusion. Hence, this study adds a valuable contribution to the knowledge and literature on the relationship between idiosyncratic risk and corporate governance, and also to the streams of literature on both idiosyncratic risk, and corporate governance

Factors Affecting the Corporate Governance Disclosure: An Analysis of Manufacturing Firms of Pakistan

This study analyzes the impact of different governance related variables on the corporate governance disclosure level of Pakistani manufacturing firms. The study period is one year i.e. 2014 and it used a sample of 50 manufacturing firms which are classified into five different categories. The analyses are done through OLS regression. A comprehensive disclosure index consisting the thirty different disclosure items is developed which served as dependent variable. Thirty disclosure items are included in the index according to the disclosure requirements of SECP code of corporate governance. Board independence, managerial ownership, foreign ownership, block holdings and audit firm status are used as corporate governance related independent variables. The results indicate that the CG disclosure level of selected manufacturing firms is positively influenced by board independence, foreign ownership, block holding ownership and audit firm status. However the results of managerial ownership variable are not statically significant and the hypothesis regarding to this variable is rejected. The study found that all the independent variables except managerial ownership are the important determinants of CG disclosure. Keywords: CGD, INDE’s, SEC

Islamic Versus Conventional Mutual Funds Performance in Pakistan; Comparative Analysis Through Performance Measures and DEA Approach

Islamic mutual funds are different from conventional mutual funds because both have different characteristics. Islamic mutual funds act upon the Shariah guidelines and rules. This study investigates the performance of Islamic and conventional mutual funds for the period of 8 years from January 01, 2010 to December 2017. For the purpose of analysis 30 Islamic mutual funds and 30 conventional mutual funds are selected as sample of the study. Study evaluates the performance of Islamic and conventional mutual funds based on different ratios like Sharpe ratio, Treynor ratio and Jensen Alphen along with data envelopment analysis technique. Sharpe and Teynor ratios of Islamic mutual funds are higher than the conventional mutual funds which shows the better performance of Islamic mutual fund as compared to conventional mutual funds. Whereas the results of Jenson Alpha showed opposing results with Treynor and Sharpe ratios in which the value of Jenson Alpha of Islamic mutual fund is lower than conventional mutual funds. Results of data envelopment analysis showed higher efficiency of Islamic mutual funds as compared to conventional mutual funds. Ultimately, it is concluded that financial performance of Islamic mutual funds is superior as compared to conventional mutual funds in Pakistani mutual fund market for the period of 2010 to 2017

Determinants of Dividend Payout: Evidence from Financial Sector of Pakistan

This study seeks to ascertain the determinants of dividend payout of financial sector in Pakistan. The dividend is an important indicator and serves as a measure of a firm’s financial performance and growth. Dividend is important decision for any firm and plays vital role in the growth and future progress of the firm. Study used quantitative approach to explore the effective determinants of DPO for the financial sector of Pakistan. The dependent variable of this research is dividend payout while the financial leverage, investments, liquidity, returns on equity and size are independent variables also functioning as determinants of DPO. The data were collected over a period of seven years from 2007 to 2013. However sample of this research is restricted to the selected listed financial firms of Pakistan. A sample of 53 financial firms is selected out of 181. For the analysis of data various statistical tools i.e. descriptive statistics, correlation matrix and panel data analysis are applied. Random effects model is selected to measure the determinants of DPO and their impact on it. The results conclude that financial leverage has a statistically significant and negative effect on dividend payout, while the advances to deposit ratio, return on equity, investment and size have a positive and statistically significant influence on dividend payout for the selected financial firms of Pakistan. Keywords: Dividend Payout Ratio, State Bank of Pakistan, Karachi Stock Exchang

Role of Family Firms to Uplift the Financial Performance and Investment Opportunities of Listed Manufacturing Firms of Pakistan

This study is conducted to analyse the relationship of Ownership Structure with Firm Performance in non-financial companies listed at Pakistan Stock Exchange during the period 2008 to 2013. The basic focus of this study was related to the performance of family firms as compared to non-family firms. The distinction between both types has been explained in literature with the help of definitions given by different authors and scholars. Keeping in view the research aims and objectives the non-financial sector of Pakistan is taken as population. Simple random sampling technique is used in accordance to research requirements and extracted a sample of 120 firms for the purpose of analysis. All these firms are listed at Pakistan Stock Exchange (PSX). Investment Opportunities (Tobin’s Q), Return on Assets (ROA) and Return on Equity (ROE) have been used as a proxy variable to explore the firm value and firm’s financial performance. Sophisticated data analysis techniques such as descriptive, correlational, panel data regression analysis have been used. Results showed that Family firms are negatively correlated and Non-Family firms give better performance. On the basis of results obtained through data analysis it is concluded that Firm Performance critically depends on Managerial Ownership. Panel data analysis has shown that firm leverage and size has no relationship with proxy variables while remaining independent variables have significant relationship with performance variables. Agency problems arise due to increase in Managerial Shareholdings in Pakistani context, which ultimately affects the performance of the firms

Role of Family Firms to Uplift the Financial Performance and Investment Opportunities of Listed Manufacturing Firms of Pakistan

This study is conducted to analyse the relationship of Ownership Structure with Firm Performance in non-financial companies listed at Pakistan Stock Exchange during the period 2008 to 2013. The basic focus of this study was related to the performance of family firms as compared to non-family firms. The distinction between both types has been explained in literature with the help of definitions given by different authors and scholars. Keeping in view the research aims and objectives the non-financial sector of Pakistan is taken as population. Simple random sampling technique is used in accordance to research requirements and extracted a sample of 120 firms for the purpose of analysis. All these firms are listed at Pakistan Stock Exchange (PSX). Investment Opportunities (Tobin’s Q), Return on Assets (ROA) and Return on Equity (ROE) have been used as a proxy variable to explore the firm value and firm’s financial performance. Sophisticated data analysis techniques such as descriptive, correlational, panel data regression analysis have been used. Results showed that Family firms are negatively correlated and Non-Family firms give better performance. On the basis of results obtained through data analysis it is concluded that Firm Performance critically depends on Managerial Ownership. Panel data analysis has shown that firm leverage and size has no relationship with proxy variables while remaining independent variables have significant relationship with performance variables. Agency problems arise due to increase in Managerial Shareholdings in Pakistani context, which ultimately affects the performance of the firms