Business Group Affiliation and Firm Performance—Evidence from
      Pakistani Listed Firms

Waseemullah,; Hasan, Arshad

doi:10.30541/v57i3pp.351-371

Cited by 2 publications

(2 citation statements)

References 41 publications

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“…The results suggest that group affiliation harms firms' value in Pakistan. These results support earlier studies, such as Gohar and Karacaer (2009), Waseemullah and Hasan (2018). GAFs fall into agency problems as insiders is involved in tunnelling firms' wealth for private benefits at minority shareholders' expense.…”

Section: Resultssupporting

confidence: 91%

“…Institutional infrastructure is under-developed in emerging countries, and BGs are more common in such environments because BGs are more capable of coping with institutional failures. BGs tend to decline in performance (Waseemullah & Hasan, 2018;Gohar & Karacaer, 2009). Agency theorists argue that BGs face severe agency conflicts (Martin et al, 2017).…”

Section: Discussionmentioning

confidence: 99%

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Concomitant of Inside-Shareholding, Group Affiliation and Firm Value: Evidence From Pakistan

Waseemullah

Tahir

Kaleem

et al. 2021

Business: Theory and Practice

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The present study inspects the comparative effects of inside shareholding on firm value for group-affiliated firms and non-group-affiliated firms in Pakistan. The research uses the excess-value as a performance measure by employing a chop-shop approach in treatment effects regression model (TERM). The results reveal that lower level and higher level inside shareholding negatively associated with firms’ value. However, it positively relates at a moderate level. Also, inside shareholding-value relationship differs significantly for group-affiliated firms and non-group-affiliated firms. Firms with inside shareholding at lower level appear to more visible in business groups, and these firms show adverse firms’ value consistent with divergence of interest effect. Nevertheless, inside ownership firms at a higher level, namely standalone firms, negatively affect firm value with entrenchment effect. The findings also confirm non-linearity in inside shareholding-firm value relationships.

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Section: Resultssupporting

confidence: 91%

Section: Discussionmentioning

confidence: 99%

Concomitant of Inside-Shareholding, Group Affiliation and Firm Value: Evidence From Pakistan

Waseemullah

Tahir

Kaleem

et al. 2021

Business: Theory and Practice

View full text Add to dashboard Cite

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The performance of business groups during institutional transition and economic downturn in a developing country

Bhutta

Sultan

Sheikh

et al. 2023

IJOEM

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PurposePakistan has experienced financial liberalization with rapid ups and downs in economic growth due to domestic issues during the last 2 decades. Motivated by inconclusive and conflicting time-driven findings about the performance of the business groups, this study examines the performance of business groups in Pakistan for a relatively long period from 2003 to 2018.Design/methodology/approachThe study uses 3,821 firm-year observations from non-financial firms listed on the Pakistan Stock Exchange (PSX). For the estimation, pooled ordinary least squares (OLS) with industry- and year fixed effects and two-step system generalized methods of moments (GMM) are used.FindingsThe study finds that group-affiliated firms outperform independent firms in accounting performance, while underperform in market performance. The outperformance is mainly driven by medium-sized business groups, while underperformance is driven by small and large business groups. Further, the study documents that the underperformance in terms of market performance of firms affiliated with small and large groups is greater before the economic downturn, while outperformance in terms of the accounting measure of firms affiliated with medium-sized groups is greater during the economic downturn. These findings support our time-driven concerns. Overall, the authors' findings are consistent with institutional and transaction cost theories.Practical implicationsBusiness groups are important channels to reduce market inefficiencies. Business groups may enhance the affiliated firms' resources and resistance capacity through active utilization of the internal capital market, specifically when market conditions are not ideal for affiliates. However, effective utilization of internal capital markets depends on group size. Therefore, investors should deliberate on the size of business groups and diversification within business groups.Originality/valueThe authors extend the literature by providing fresh evidence related to the performance of business groups in the Pakistani context while accounting for the role of the size of business groups.

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Business Group Affiliation and Firm Performance—Evidence from Pakistani Listed Firms

Cited by 2 publications

References 41 publications

Concomitant of Inside-Shareholding, Group Affiliation and Firm Value: Evidence From Pakistan

Concomitant of Inside-Shareholding, Group Affiliation and Firm Value: Evidence From Pakistan

The performance of business groups during institutional transition and economic downturn in a developing country

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