Purpose The purpose of this paper is to examine the impact of corporate governance index (PAKCGI) on firm financial distress for a sample of 152 non-financial firms listed at Pakistan Stock Exchange (PSX) over the period from 2003 to 2017. Design/methodology/approach To examine the impact of PAKCGI on financial distress (Altman Z-Score), random effect model is applied. The PAKCGI is a self-constructed index based on the five important factors of corporate governance practices, i.e. board of directors, audit committees, right of shareholders, disclosures and risk management. The binary coding approach is adopted for the construction of PAKCGI. Altman Z-Score model is used as a proxy for financial distress indicator. The absolute value of Altman Z-score has been taken as financial distress indicator. Findings The outcomes of the study indicate a positive impact of PAKCGI on risk of firms’ financial distress. The positive coefficient of PAKCGI implies that the good corporate practices work as catalyst to reduce risk of financial distress in Pakistan. A significant negative impact of block holders on financial distress suggests that the concentrated block ownership take monopolistic decision to protect their interests. It has also been observed that significant positive impact of institutional ownership on financial distress exists in the Pakistani listed firms. Furthermore, this study also reveals that significant negative association between board size, CEO duality and financial distress indicator. Research limitations/implications The findings may encourage the Pakistani listed companies to follow and implement good corporate governance practices, which would lead to increase the confidence of investors, regulators and stakeholders. Originality/value The current study extends the corporate governance literature by examining the relationship between the corporate governance attributes and the financial distress status of Pakistani listed companies. From the academic perspective, this paper adds to the knowledge concerning the association between corporate governance practices and risk of financial distress in emerging markets.

Purpose The capital markets witness phenomenal shifts of corporate control. With the shift of world economy into a global one, there has been a rapid increase in the volume of acquisitions. The previous studies shed light on the motives behind acquisition and impact of acquisition on both bidding and target firms. The purpose of this study is to bridge a gap in literature by exploring the factors affecting the acquisition ability (AA) of the firms. The study has analyzed the role of financial strength, corporate governance and regulatory influence on AA of acquiring firm. Design/methodology/approach Cross-sectional data has been analyzed with respect to Pakistan stock exchange for a period of 2004-2017 by using logit regression. Findings Analysis indicates that firm-specific variables are important determinants in firm’s decision to acquire. Chief Executive Officer duality and presence of institutional shareholders on the board contribute to this important phenomenon in the life of the acquiring firms. Bidding firm’s financial strength is also another important consideration while going for corporate control transfer transactions. The empirical results indicate the better AA for firms characterized by minimum capacity usage, lower level of intangible assets, lower debt levels and lower advertising expenses. However, the regulatory factor has no significant role in firms’ AA. The findings of the study are helpful for managers, regulators and policymakers. Originality/value Analyzing the role of financial strength, corporate governance and regulatory influence on AA of acquiring firm is a rare study, especially in an emerging country such as Pakistan.

No abstract

The purpose of the study is to examine the sustainability of the tax aggressiveness of shared directors from coercive isomorphism and whether social networks of directors have an impact on their tax aggressiveness. Specifically, the study intends to examine how tax knowledge diffuses across firms and how this knowledge diffusion affects connected firms. To test the constructed hypothesis, the panel logistic regression model is estimated using a firm-level panel dataset for the US and Pakistan to analyze cross-country differences, as the USA holds more legislation and effective governance mechanisms. The study covers the period of 2007–2019. The data required for the empirical analysis was collected from the Thompson Reuters database. The results of panel logistic regression show a significant relationship between tax aggressiveness and director’s connections, suggesting that information diffuses by board interlocks. Specifically, the estimates suggest that there is a positive and significant influence of connected directors on the probability that the tax aggressiveness spreads through coercive isomorphism, inferring that the sustainability of the tax aggressiveness of shared directors from coercive isomorphism is strong. Findings reveal that Pakistani firms, when compared to the USA, are more likely involved in tax aggression because of fewer legislations and tax reforms. The results also reveal that coercive isomorphism significantly mediates the relationship between board interlocks and tax aggressiveness. These findings provide valuable insights into detecting the tax aggressiveness of firms and the channels through which this spread. The study contributes to the scarce research on the impact of board interlocks on tax aggressiveness and the influence of coercive isomorphism on these impacts. This study can help tax authorities in identifying tax-saving strategies through connected directors. Secondly, this study provides empirical evidence to support the diffusion of information regarding tax aggression and provides mechanisms with which to detect tax aggression. Third, our choice of empirical context also helps us contribute to the management practice of firms. CEOs and boards should be wary of interlocks with organizations, lest they inadvertently become reticent and hence prove to be of no good.

The aim of the study is to identify the factors that influence liquidity risks of the banks by considering the panel of 18 top listed banks in Pakistan during a period of 2010 -2016. The study employed panel random effect regression model to absorb time-invariant shocks, which gives robust inferences. The results of liquidity risk confirmed that the country’s economic growth and price inflation further escalates liquidly risk while, FDI inflows reduces liquidity risks in Pakistani’s banks, thus it is concluded that bank’s liquidity risks required easy monetary policy to advancing loans and charging low interest rate, which ultimately will increase ROA, and ROE, while it would helpful to decrease high risk of bank’s liquidly in a given country.