Increasing international trade and investments had made firms’ cash flows more vulnerable to exchange rate movements; therefore derivatives are widely used by corporations to minimize foreign exchange exposure. Currents study aims to... more
Increasing international trade and investments had made firms’ cash flows more vulnerable to exchange rate movements; therefore derivatives are widely used by corporations to minimize foreign exchange exposure. Currents study aims to identify the factors affecting firms’ decision to use derivatives by using the data of 86 non-financial firms of Pakistan for the period 2004-2007. For detailed analysis firms’ endogenous policies are regressed separately in order to capture endogenenity effects. Logit model is used to test the factors effecting the firms’ decision to use derivatives. Results show that firms having higher foreign sales are more likely to use derivatives to reduce exchange rate exposure. Also highly financial distressed large size firms having financial constraints and fewer managerial holdings are more likely to use derivatives. Study concludes that in general firms’ use derivative in order to maximize shareholders’ wealth by reducing exchange rate exposure.
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This article explores the relationship between financial development and imports focusing on economic growth and import prices as potential contributors to this relationship. We have applied combined cointegration and causality tests... more
This article explores the relationship between financial development and imports focusing on economic growth and import prices as potential contributors to this relationship. We have applied combined cointegration and causality tests using multivariate model for long-run and augmented Dickey–Fuller (ADF) as well as Phillips–Perron (PP) unit root to test the order of integration of the variables. The empirical evidence confirms the presence of a long-run relationship among the series. Financial development increases imports demand. Economic growth and imports prices decrease imports consumption. Imports are negatively affected by relative prices.
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Globalization and financial breakdown of many corporate conglomerates in the developed world engrossed the attention of researchers and policy makers towards the need and importance of an effective corporate governance system for... more
Globalization and financial breakdown of many corporate conglomerates in the developed world engrossed the attention of researchers and policy makers towards the need and importance of an effective corporate governance system for resolving the agency conflict between the stakeholders and managers, and hence a firms’ success. Among corporate governance mechanisms, how ownership is structured between all the shareholders of a firm is considered to be of much importance. The purpose of this article is two-fold: first, to analyze the impact of institutional ownership on firm performance and, second, to throw some light on the two scenarios of institutional ownership prevailing in Pakistan’s capital market. In the first scenario, financial institutions have a board representation (active financial institutions), while in the second scenario, financial institutions do not have board representation (passive financial institutions). Using the data of 200 non-financial Pakistani firms listed...
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The core objective of the current study is to explore the moderating role of business strategy on the established relationship between capital structure and firm performance by selecting the data of 333 non-financial firms of Pakistan... more
The core objective of the current study is to explore the moderating role of business strategy on the established relationship between capital structure and firm performance by selecting the data of 333 non-financial firms of Pakistan over the period of 2006 to 2013. The empirical results indicate that debt financing is imperative both for the accounting and market performance of the selected firms while attempting to pursue the cost leadership strategy. Moreover, as the firms follow the hybrid strategy, product differentiation strategy and firms with unclear strategic situation, the benefits of debt decreases and incurs a significant performance penalty.
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The corporations, all over the world, are using derivative instruments to hedge their Exchange Rate exposure arises from increased globalization and market determined Exchange Rates. Despite of this, most of the studies explore the impact... more
The corporations, all over the world, are using derivative instruments to hedge their Exchange Rate exposure arises from increased globalization and market determined Exchange Rates. Despite of this, most of the studies explore the impact of Foreign Currency Derivative (FCD) usage and extent of such usage on firm value in developing countries, whereas very few examines this relationship in developing countries. Current study, therefore, attempts to examine the relationship between FCD instruments and firm value by using the data of 181 Pakistani non-financial firms for the period 2004-2010. Controlling firm specific variables, empirical findings support value increasing effects of usage and extent of such derivative usage. Detailed analysis indicates that corporations with exchange rate exposure, measured by Foreign Sales, can enhance their firm value by using FCD instruments. The findings remain same for alternative specifications like endogeneity and self-selection problem, that u...
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Present study used the theoretical framework of both the Agency and Stakeholder theories in order to empirically investigate the importance of Corporate Social Responsibility (CSR) for the financial performance (FP) of firm both in the... more
Present study used the theoretical framework of both the Agency and Stakeholder theories in order to empirically investigate the importance of Corporate Social Responsibility (CSR) for the financial performance (FP) of firm both in the short and long run. According to the agency theory approach core motive of the company’s existence is to maximize their owner’s wealth and therefore spending on other stakeholders in the form of CSR is an additional cost that leads to decrease in the FP. Contrary to this, Stakeholder theory argues that firms should satisfy the social needs of various stakeholders and perform CSR as it protects the firm from negative confrontations and boycotts of their stakeholders that reduces the operating cost and boosts the financial performance. A sample of 76 Pakistani manufacturing firms listed at Karachi Stock Exchange has been used for the time period ranged from 2009-2012. A series of tests like F-test, LM-test and Hausman-test have been applied to identify ...
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The study intends to investigate the relationship between corporate governance quality and dividend policy in Pakistan. The sample of the study covers Karachi Stock Exchange 100 index listed companies from the period of 2008 to 2011. The... more
The study intends to investigate the relationship between corporate governance quality and dividend policy in Pakistan. The sample of the study covers Karachi Stock Exchange 100 index listed companies from the period of 2008 to 2011. The results have confirmed the support of outcome model in Pakistan which confirms that firm’s dividend policy moves with the direction of corporate governance quality. Moreover, there are positive associations between size of the firms, profitability and dividend policy. Finally, investment opportunities and leverage are negatively related with dividend policy. These results, taken as a whole, indicate that better governed firms used to pay more dividends and it implies that firm-level corporate governance and country-level investor protections are complements to each other rather than substitution.
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The study has investigated the determinants of performance in the general insurers of Pakistan over the period 2004 to 2009. Performance of the general insurers is measured as Return on Assets (ROA) and Return on Equity (ROE) whereas;... more
The study has investigated the determinants of performance in the general insurers of Pakistan over the period 2004 to 2009. Performance of the general insurers is measured as Return on Assets (ROA) and Return on Equity (ROE) whereas; size, investments, leverage, claims, past year performance and age are chosen as explanatory variables. The results suggest that size, investment, past performance and age are positively related whereas; leverage and claims are negatively related with the performance of the general insurers. Moreover, it was also found that the recent economic uncertainty has adversely affected the performance of the general insurers in Pakistan.
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... Rafiq, M., Iqbal, A., Atiq, M. (2008), The Determinants of Capital Structure of the Chemical Industry in Pakistan, The Lahore Journal of ... Tariq, B. Yasir, and Hijazi S. (2006), Determinants of Capital Structure: A Case for... more
... Rafiq, M., Iqbal, A., Atiq, M. (2008), The Determinants of Capital Structure of the Chemical Industry in Pakistan, The Lahore Journal of ... Tariq, B. Yasir, and Hijazi S. (2006), Determinants of Capital Structure: A Case for Pakistani Cement Industry, The Lahore Journal of ...
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The present study contributes to existing literature by empirically testing the moderated mediating role of firm’s risk on the relationship between derivative usage and firm value by gathering sample data of Pakistani and Malaysian... more
The present study contributes to existing literature by empirically testing the moderated mediating role of firm’s risk on the relationship between derivative usage and firm value by gathering sample data of Pakistani and Malaysian non-financial firms. By using Bootstrap technique of Hayes (2015), study finds that the use of derivative has both direct and indirect effect on firm value in Pakistan, contrary to Malaysia, as derivative usage significantly enhances firm value by reducing firm’s risk. Findings remain same for both foreign currency and interest rate derivative usage that firm’s risk significantly mediates the relationship between derivative usage and firm value in Pakistani non-financial corporations. Keywords: Derivative Usage, Firm Value, Firm's Risk, Moderated Mediation, Pakistan, Malaysia
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Pakistan is an emerging economy and a modernizing workplace. This research surveyed 318 citizens, managers, and employees in Lahore and Islamabad to measure their Personal Business Ethics Scores (PBES) based on age and gender, as well as... more
Pakistan is an emerging economy and a modernizing workplace. This research surveyed 318 citizens, managers, and employees in Lahore and Islamabad to measure their Personal Business Ethics Scores (PBES) based on age and gender, as well as to see if face-to-face and online data collection processes make a difference in their level of ethical maturity. Furthermore, this study contributes to the theory of moral development. The results suggest that age is a significant factor in moral development as it leads to higher scores in moral maturity. Gender is not a factor in the ethical maturity scores of these respondents. Kohlberg’s moral development theory regarding ethical maturity is supported since those who were older do have higher business ethics scores. Furthermore, significant differences were found based on the data collection process. These results can be helpful for human resources managers and expatriates who work in these cities with local professionals. Suggestions and implic...
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Integration of global markets has highlighted the issue of economic competitiveness, the base line to attract the foreign direct investment. In this increasingly globalized and interdependent world economy, knowledge and skills of... more
Integration of global markets has highlighted the issue of economic competitiveness, the base line to attract the foreign direct investment. In this increasingly globalized and interdependent world economy, knowledge and skills of workforce will be the key competitive weapons of nations and thus should be focused for enhancement of the economic competitiveness (Thurow, 1994). The current study focuses on the role of human resource management as a tool to improve the economic competitiveness of South Asian region in general and Pakistan in particular and hence attracting the foreign capital inflow to boost the economic growth.
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Due to the separation of ownership and control in modern corporation, the form of relationship between firm performance and insider ownership has been the subject of empirical investigation for last many decades. It is argued, that as... more
Due to the separation of ownership and control in modern corporation, the form of relationship between firm performance and insider ownership has been the subject of empirical investigation for last many decades. It is argued, that as managers' equity ownership increases, their interests coincide more closely with those of outside shareholders, and hence, the conflicts between managers and shareholders are likely to be resolved. Thus, management's equity ownership helps resolve the agency problem and improve the firm's performance (Jensen and Meckling, 1976; Agrawal and Knoeber, 1996; Chen et al., 2003). However, several studies suggest that management's ownership does not always have a positive effect on corporate performance (Demsetz and Villalonga, 2000; Cheung and Wei, 2006). Most of the empirical studies on this issue have focused on the developed economies and there is little empirical evidence on the emerging economies in general and almost no work has been do...
The study intends to determine the enterprising behavior of enterprise-less rural women entrepreneurs dwelling in remote areas of Pakistan for the purpose of assessing the enterprising behavior possessed by these women entrepreneurs,... more
The study intends to determine the enterprising behavior of enterprise-less rural women entrepreneurs dwelling in remote areas of Pakistan for the purpose of assessing the enterprising behavior possessed by these women entrepreneurs, their capacity as women to handle the marketing of their businesses and finally the factors that influence their decision making environment. The concept of rural women entrepreneurship is an emerging phenomenon and gaining popularity in this era of economic recession. World is embarking on promoting the rural entrepreneurship among women in order to control the economic imbalance in the society and also to empower women socially and economically. The phenomenon of rural women entrepreneurship in Pakistan is very much under-explored and the policy strategies to stimulate the rural women interest in entrepreneurship are not rightly directed in the absence of a base line research. This study, therefore, intends to determine the enterprising behavior posse...
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The present study examines the industry specific attributes of firms in Automobile, Engineering, and Cable and Electrical Goods Sectors affecting the determinants of capital structure and validates the results with Booth et. al. (2001)... more
The present study examines the industry specific attributes of firms in Automobile, Engineering, and Cable and Electrical Goods Sectors affecting the determinants of capital structure and validates the results with Booth et. al. (2001) and Rajan and Zingales (1995) .The study uses pooled data regression model on the sample of 22 Automobile, 7 Cable and Electrical Goods and 8 Engineering Firms to identify the determinants of capital structure. The debt to total assets ratio is used as a proxy for leverage and the impact of size, profitability, tangibility of assets, cost of debt, taxes, liquidity and non debt tax shield is analyzed on leverage. It is pertinent to report that the study uses liquidity, tax and cost of debt variables which were not used in the earlier studies conducted in Pakistan on industry specific attribute of capital structure and have significant influence on debt financing decisions. The empirical results reflects that firms of these three sectors with good liqui...
The issue of business ethics is generally addressed at the firm or micro level. It is believed that ethical behaviour contributes towards the success of a business enterprise. However, it is also imperative to study the role of ethical... more
The issue of business ethics is generally addressed at the firm or micro level. It is believed that ethical behaviour contributes towards the success of a business enterprise. However, it is also imperative to study the role of ethical behaviour for efficient allocation of resources at the macro level. It is argued that the market system is generally more efficient than the traditional and command systems. The prerequisites of a market system include property rights, freedom of choice, and full information. Unethical behaviour including bribery, coercive acts, deceptive information, theft, and discrimination distorts the market system that leads to inefficient allocation of economic resources. The mixed economy of Pakistan is based on a market system, government regulations, and limited property rights. The symptoms of unethical behaviour, including bribery, coercive action, theft and discrimination are found in both government institutions and the private enterprises which lead to ...
This paper investigates the determinants of trade credit financing used by listed manufacturing firms in Pakistan. For this purpose, balanced panel data are used that consist of 327 manufacturing firms listed on KSE Pakistan and time... more
This paper investigates the determinants of trade credit financing used by listed manufacturing firms in Pakistan. For this purpose, balanced panel data are used that consist of 327 manufacturing firms listed on KSE Pakistan and time period from 2005 to 2013. Results of system GMM estimator applied on dynamic panel data set reveal that trade credit financing used by listed manufacturing firms is significantly affected by its first lag, trade credit extended to customers, availability of short term bank credit, their sales growth, profitability, creditworthiness, collateral and financial leverage. Positive coefficient for first lag of trade credit financing shows that firms’ trade credit financing is dynamic. The speed of making adjustment in trade credit financing is found relatively high due to low cost of making adjustment. Findings of this study has managerial implication for trade credit financing decision of listed manufacturing firms. For future research, investigation of the ...
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Pakistan is the 15th largest producer of sugar in the world, 5th largest in terms of area under sugar cultivation and 60th in yield. The sugar industry is the 2nd largest agro based industry which comprises of 81 sugar mills. With this... more
Pakistan is the 15th largest producer of sugar in the world, 5th largest in terms of area under sugar cultivation and 60th in yield. The sugar industry is the 2nd largest agro based industry which comprises of 81 sugar mills. With this scenario, Pakistan has to import sugar which exposes it to the effects of shortage and rising prices in the world. The present sugar crisis has opened up new avenues for researcher to analyse the performance and efficiency of the firms in this sector. Total factor productivity plays a significant role in measuring the performance of a firm which ultimately affects the shareholder’s value. This paper analyses the performance of sugar firms in Pakistan and estimate/calculate the Malmquist total factor productivity growth indices using non-parametric approach. TFP growth is further decomposed into technical, scale and managerial efficiency change using balanced panel data of 20 sugar firms listed on Karachi Stock Exchange for the period 1998 to 2007. The...
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The corporate finance literature has traditionally focused on the study of long-term financial decisions. Researchers have particularly examined investments, capital structure, dividends or company valuation decisions, among other topics.... more
The corporate finance literature has traditionally focused on the study of long-term financial decisions. Researchers have particularly examined investments, capital structure, dividends or company valuation decisions, among other topics. However, short-term assets and liabilities are important components of total assets and needs to be carefully analyzed. Management of these short-term assets and liabilities warrants a careful investigation since the working capital management plays an important role for the firm’s profitability and risk as well as its value. It requires continuous management to maintain proper level in various components of working capital i.e. cash, receivables, inventory and payables etc. The present study is an attempt to evaluate the efficiency of the working capital management of cement sector of Pakistan for the period 1988-2008. Instead of employing the traditional ratios; working capital efficiency has been measured in terms of utilization index, perform...
The management styles of people are influenced by their cultural contexts and urgency of completing tasks. For example, it is expected that people will get things done in a speedy manner when their jobs are on the line, but they will... more
The management styles of people are influenced by their cultural contexts and urgency of completing tasks. For example, it is expected that people will get things done in a speedy manner when their jobs are on the line, but they will still try to minimize the negative impact to their relationships. To explore the leadership tendencies of working adults in the Pakistani workplace, this paper focused on comparing the leadership orientation of 232 respondents based on their age and gender. Pakistanis have a significantly higher score on task orientation. Their relationship orientation score is also on the moderately high range. The high score on both leadership dimensions reflects on their cultural orientation. Practical suggestions for expatriates and implications for future studies are presented.
Purpose The purpose of this paper is to explore the moderating role of competitive intensity between the existing relationship of capital structure and firm performance. Design/methodology/approach Using the balanced panel data of listed... more
Purpose The purpose of this paper is to explore the moderating role of competitive intensity between the existing relationship of capital structure and firm performance. Design/methodology/approach Using the balanced panel data of listed non-financial firms of Pakistan, the present study adopts both the panel and OLS estimation techniques to draw the inferences. Findings The results exhibit that high debt ratio is harmful for the accounting performance of the selected sample firms of Pakistan. In addition, product market competition negatively moderates the relationship between capital structure and firm performance which suggests that high product market competition can be used as a substitute of debt financing to align the interests of a firm’s managers and shareholders. Practical implications The findings of the research provide evidence for the policy makers/regulators that the sample firms should discourage the high debt financing in the presence of competitive intensity in the...
Research Interests: Business and Management
Manufacturing sector of Pakistan accounts for 19.1 percent of GDP and is the second largest sector of the economy. It grew by 8.4 percent during 2007 as against 10 percent last year. In the manufacturing sector, large scale manufacturing... more
Manufacturing sector of Pakistan accounts for 19.1 percent of GDP and is the second largest sector of the economy. It grew by 8.4 percent during 2007 as against 10 percent last year. In the manufacturing sector, large scale manufacturing (LSM), plays a vital role and accounts for approximately 70 percent of overall manufacturing [Economic Survey of Pakistan (2006-07)]. During 2006-07 relatively slower pace of expansion exhibits signs of moderation on accounts of higher capacity utilisation, difficulties in the textile sector and lower than expected scale of operations of oil refineries. A number of other factors have also contributed to the low pace of expansion in manufacturing including zero percent growth in raw cotton production which is a critical input for the textile industry, vegetable ghee and cooking oil which comprise about 5.5 percent of the LSM sector, showed uninspiring performance due to unparalleled rise in international palm and soybean oil prices. The performance o...
Research Interests: Economics, Pakistan, Oil and gas, Data Envelopment Analysis, Applied Economics, and 13 moreTechnological change, Technical Change, Negative Affect, Karachi Stock Exchange, Technical efficiency, Manufacturing Industry, Total factor productivity, Manufacturing Sector, Pakistan Development, Productivity Growth, Malmquist productivity index, Total Factor Productivity Growth, and Technical Efficiency Change
Due to the separation of ownership and control in modern corporation, the form of relationship between firm performance and insider ownership has been the subject of empirical investigation for last many decades. It is argued, that as... more
Due to the separation of ownership and control in modern corporation, the form of relationship between firm performance and insider ownership has been the subject of empirical investigation for last many decades. It is argued, that as managers’ equity ownership increases, their interests coincide more closely with those of outside shareholders, and hence, the conflicts between managers and shareholders are likely to be resolved. Thus, management’s equity ownership helps resolve the agency problem and improve the firm’s performance (Jensen and Meckling, 1976; Agrawal and Knoeber, 1996; Chen et al., 2003). However, several studies suggest that management’s ownership does not always have a positive effect on corporate performance (Demsetz and Villalonga, 2000; Cheung and Wei, 2006). Most of the empirical studies on this issue have focused on the developed economies and there is little empirical evidence on the emerging economies in general and almost no work has been done on emerging e...
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This article investigates the validation of Harberger–Laursen–Metzler hypothesis using Pakistani data over the period of 1978Q1–2012Q4. We have used Gregory–Hansen cointegration approach accommodating structural break in the series. The... more
This article investigates the validation of Harberger–Laursen–Metzler hypothesis using Pakistani data over the period of 1978Q1–2012Q4. We have used Gregory–Hansen cointegration approach accommodating structural break in the series. The results confirm the presence of cointegration between the variables. The impact of terms of trade is positive on Pakistan’s trade balance. Domestic income improves local trade balance. Foreign income has a positive impact on Pakistan’s trade balance. The causality analysis indicates the presence of feedback effect between terms of trade and trade balance. Domestic income Granger causes trade balance. The unidirectional causality is running from foreign income to Pakistan’s trade balance. This study opens up new directions for policymakers for improvements in terms of trade to sustain trade balance in Pakistan.
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Purpose – The purpose of this paper is to examine the debt structure of group affiliated firms in Pakistan for the period of 2009-2011. The study seeks to know the level of debt specialization in group affiliated firms. If they do; then... more
Purpose – The purpose of this paper is to examine the debt structure of group affiliated firms in Pakistan for the period of 2009-2011. The study seeks to know the level of debt specialization in group affiliated firms. If they do; then how are they different from stand-alone firms? Design/methodology/approach – The study primarily uses Herfindahl-Hirschman Index and Excl90 as measures of debt specialization, which are further used in cluster, threshold and conditional analysis. Corporate groups are characterized to subsidize their affiliates through internal debt market and loan guarantee. Logistic regression model is used to analyze association among the measures of debt specialization and firm-specific characteristics for group affiliated and stand-alone firms. Findings – The results show that about 85 percent firms use more than 50 percent of debt from one debt type. However, group affiliated firms are more inclined toward debt specialization than stand-alone firms. Tangibility ...
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The aim of the paper is to explore the association between financial development, domestic savings and poverty in case of Pakistan. The study has employed annual time series data over the period of 1971-2005. The ARDL bounds testing... more
The aim of the paper is to explore the association between financial development, domestic savings and poverty in case of Pakistan. The study has employed annual time series data over the period of 1971-2005. The ARDL bounds testing approach has been used for cointegration and Vector Error Correction Model (VECM) for the direction of causality for long-and-short runs. Unit root problem is handled by the use of Ng-Perron unit root test. Our results inidacte that feedback effect is found between finnacial development and poverty reduction in the long run but strong cuasality is running from fall in poverty to financial development in the short run. This paper opens up new directions for policy makers to reduce poverty with the help of viberant finacial sector in the country.