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The Paradox of Managerial Ownership and Financial Decisions of the Textile Sector: An Asian Market Perspective

Author

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  • Muhammad Farhan Basheer*

    (School of economics finance and Banking University of Utara Malaysia)

  • Waeibrorheem Waemustafa

    (School of economics finance and Banking University of Utara Malaysia)

  • Aref Abdullah Ahmad

    (Management and Science University Malaysia)

Abstract

The managerial ownership and its impact on financial decisions such as cash holding, and capital structure have been the subject of debate of corporate governance literature. The main objective of this study is to investigate the impact managerial ownership places on financing and cash holding decisions. In addition to that, the currents study is also offering an interesting insight on the issue of simultaneity of financing and cash holding decisions and also will discuss that how the interdependence changes as the level of managerial ownership changes. This study examines the data of 60 companies listed on Pakistan Stock Exchange over the period from 2013 to 2017. To trace the endogeneity, we have employed the Wu Hausman test. It evident from the results that the p-value of both models is significant, which confirms the endogeneity between cash holdings and capital structure decisions. In both models, the managerial the leverage and cash holdings are in positive relation. The MO appears in a non-linear relationship with both cash holding and capital structure decisions of textile firms. The results of the study are also providing support to agency theory, pecking order theory and signaling theory.

Suggested Citation

  • Muhammad Farhan Basheer* & Waeibrorheem Waemustafa & Aref Abdullah Ahmad, 2018. "The Paradox of Managerial Ownership and Financial Decisions of the Textile Sector: An Asian Market Perspective," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 184-190:4.
    • Handle: RePEc:arp:tjssrr:2018:p:184-190
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    References listed on IDEAS

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    Cited by:

    1. Azmi, Nurul Najwanie Fatiehah, 2023. "A Study on KPJ Healthcare Sdn Bhd in Malaysia Performance and Its Determinants," MPRA Paper 119810, University Library of Munich, Germany.
    2. Yap, Chia Ying, 2023. "Corporate Governance and Its Determinants : A study on Apex Healthcare Berhad Malaysia," MPRA Paper 119807, University Library of Munich, Germany.
    3. Azmi, Siti Nor Aisyah, 2023. "Corporate Governance and Its Determinants: A Study of Pharmaniaga Sdn Bhd," MPRA Paper 119806, University Library of Munich, Germany.
    4. Mohamad Helmi bin Hidthiir & Muhammad Farhan Basheer & Saira Ghulam Hassan, 2019. "The Simultaneity of Corporate Financial Decisions Under Different Levels of Managerial Ownership: A Case of Pakistani Listed Firms," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(2), pages 147-159, July.
    5. Tan Ke Wen, Carmen, 2023. "Company Performance and Its Determinants: A Study on New Hoong Fatt Holdings Berhad," MPRA Paper 119821, University Library of Munich, Germany.

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