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The Influence of Board Characteristics on Shareholders Assessment of Risk for Small and Large Firms: Evidence from Pakistan

Author

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  • Muhammad Imran Nazir

    (Department of Economics and Finance, Mohammad Ali Jinnah University, Islamabad, Pakistan)

  • Muhammad Zulfiqar

    (Department of Management Sciences, National University of Modern Languages, Islamabad, Pakistan)

  • Muhammad Bilal Saeed

    (Department of Economics and Finance, Mohammad Ali Jinnah University, Islamabad, Pakistan)

  • Yasir Habib

    (Department of Economics and Finance, Mohammad Ali Jinnah University, Islamabad, Pakistan)

Abstract

This unique study examines the alliance between board characteristics and shareholders assessment of risk as revealed in the volatility of stock returns for Pakistani listed companies. For this purpose, a sample of 30 manufacturing companies is used that are listed on Karachi Stock Exchange for the period of 2004-2013. The study uses panel data analysis and reports that random effect model is the best results yielding method. Our hypothesis incorporates preceding evidence that the small and large firms have spectacularly diverse constitution of boards, shimmering the firms diverse monitoring and counseling needs. It is hypothesized and locate confirmation with the intention of entrenched the large firms are able to produce affirmative net benefits, in the appearance of lesser risk, form board independence, gender diversity and director ownership. On the other hand the finding of this study showed the board size is negatively associated with the shareholder assessment of risk for large firms and the positive associated with the assessment of risk for small firms. The CEO duality is positive associated with the assessment of risk for large and negative associated amid assessment of risk for small firms. The results have insinuation for regulatory authorities, shareholders and directors to take steps to improve the board competanices for better performance

Suggested Citation

  • Muhammad Imran Nazir & Muhammad Zulfiqar & Muhammad Bilal Saeed & Yasir Habib, 2016. "The Influence of Board Characteristics on Shareholders Assessment of Risk for Small and Large Firms: Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 596-606.
    • Handle: RePEc:eco:journ1:2016-02-32
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    3. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).
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    More about this item

    Keywords

    Board Characteristics; Shareholders Assessment of Risk; Panel Data Analysis; Karachi Stock Exchange;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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