The impact of concentrated leverage and ownership on firm performance : a case in Pakistan

Rao, Mirriam; Khursheed, Ambreen; Mustafa, Faisal

doi:10.17270/J.LOG.2020.375

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Tytuł artykułu

The impact of concentrated leverage and ownership on firm performance : a case in Pakistan

Autorzy

Rao Mirriam , Khursheed Ambreen , Mustafa Faisal

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DOI

10.17270/J.LOG.2020.375

Warianty tytułu

Wpływ struktury własności na efektywność firm na przykładzie Pakistanu

Języki publikacji

Abstrakty

Background: The objective of this study is to determine the impact of concentrated leverage and ownership (high levels of control and power) on firm performance in the case of Pakistan’s logistics sector separately in the presence and absence of growth options available to the firm. Both leverage and ownership concentration can have a significant influence on firm performance in either a positive or a negative way. Methods: In the data sample of this study, 141 companies in Pakistan listed on the Karachi Stock Exchange were selected with a study window from 2008 to 2018. The selection criteria for our sample study are based on firms with the highest market capitalization. Using a Panel based regression methodology, Generalized Methods of Estimating Equations are applied, which cover for 1st and 2nd order serial correlation and controls for endogeneity and autocorrelation problems. Results: The overall results indicate that the availability and non-availability of growth options to firms are very important factors in analyzing ownership concentration and debt influence on firm performance. This paper takes growth option availability and non-availability as dummy variables and finds that in the presence of growth options, non-linear relations are found between firm performance and ownership concentration and positive significant relations of debt with firm performance. Whereas, in the absence of growth opportunities, inverse parabola relations are depicted of ownership concentration and firm performance, and negative relations between debt and firm performance. Conclusions: Financial leverage represents a two part structure, negative in the presence of growth options and positive in the absence of growth options. The study demonstrates that high levels of power concentrated in the hands of owners leads to a convergence and entrenchment effect depicting non-linear relations with financial performance in both the availability and non-availability of growth options. Furthermore, the study also revealed that the explanatory power of results with a sales rate of growth (as a growth options measurement proxy) is higher than the Price to Earnings Ratio measurement proxy.

Wstęp: Celem pracy jest określenie wpływu struktury własnościowej firmy na efekty jej działalności w obszarze sektora logistycznego w Pakistanie w przypadku opcji możliwości rozwojowych firmy oraz jej braku. Struktura własnościowa ma istotny wpływ zarówno pozytywny jak i negatywny na efekty działalności firmy. Metody: W celu uzyskania danych do analizy, wybrano 141 firm pakistańskich, będących obecnych na giełdzie w Karachi. Dane pochodziły z okresu 2008-2018. Kryterium wyboru tych firm była najwyższa rynkowa kapitalizacja. Dane poddano analizie statystycznej za pomocą metody GEE (generalized estimating equation) stosowanej dla problemów endogeniczności i autokorelacji. Wyniki: Uzyskane wyniki pokazują możliwości i ich brak dla różnych opcji wzrostu firm jako bardzo ważny czynnik wpływu struktury własnościowej oraz zadłużenia na efekty działalności firmy. W przypadku istnienia możliwości rozwoju dla firmy, wykryto zależność pomiędzy efektami działalności firmy and pozytywną istotną zależność pomiędzy zadłużeniem a efektami działalności firmy. W przypadku braku możliwości rozwoju zaobserwowane negatywną zależność pomiędzy strukturą własnościową a efektywnością firmy jak również negatywną zależność pomiędzy zadłużeniem a efektami działalności firmy. Wnioski: Dźwignia finansowa ma dodatni wpływ w przypadku istnienia możliwości rozwoju i negatywny w przypadku jego braku. Uzyskane wyniki wskazują, że skupienie władzy w małym gronie właścicieli prowadzi do konwergencji i efektu „okopania się” w połączeniu z nieliniową zależnością od wyników finansowym w przypadku zarówno brak jak i występowania możliwości rozwoju firmy.

Słowa kluczowe

growth opportunities leverage ownership concentration firm value underinvestment overinvestment Pakistan

możliwości rozwoju dźwignia finansowa struktura własności wartość firmy niedoinwestowanie przeinwestowanie Pakistan

Wydawca

Wyższa Szkoła Logistyki

Czasopismo

LogForum

Rocznik

2020

Tom

Vol. 16, no. 1

Strony

15--31

Opis fizyczny

Bibliogr. 55 poz., tab.

Twórcy

autor

Rao Mirriam

marriam.rao@ucp.edu.pk

UCP Business School, Faculty of Management Studies, University of Central Punjab, 1 Khayaban-e-Jinnah Road, Johar Town, Lahore, Pakistan

autor

Khursheed Ambreen

ambreen.khursheed@ucp.edu.pk

UCP Business School, Faculty of Management Studies, University of Central Punjab, 1 Khayaban-e-Jinnah Road, Johar Town, Lahore, Pakistan

autor

Mustafa Faisal

faisal.mustafa@ucp.edu.pk

UCP Business School, Faculty of Management Studies, University of Central Punjab, 1 Khayaban-e-Jinnah Road, Johar Town, Lahore, Pakistan

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Uwagi

Opracowanie rekordu ze środków MNiSW, umowa Nr 461252 w ramach programu "Społeczna odpowiedzialność nauki" - moduł: Popularyzacja nauki i promocja sportu (2020).

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Bibliografia

Identyfikator YADDA

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