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Product market competition and investment efficiency nexus with mediating effect of firm risk-taking in Pakistan

Author

Listed:
  • Sadaf Ali

    (Riphah International University)

  • Ajid ur Rehman

    (Riphah International University)

  • Muhammad Jawad

    (HITEC University)

  • Munazza Naz

    (Fatima Jinnah Women University)

Abstract

The objective of this paper is to analyze the impact of the product market competition on investment efficiency with the mediating effect of Firm Risk Management through a dynamic panel estimation model. The sample consists of 260 non-financial firms listed on the Pakistan stock exchange for the period of 2010–2022. In addition, this paper analyzes the data through the mediation technique as per a review of the prior literature. Investment efficiency is the primary function of corporate finance. Pakistan being an emerging country is mostly owned by the family-owned business. These businesses have different policies as compared to non-family-owned businesses. This is the empirical indication that product market competition decreases investment efficiency in an emerging economy. The result reveals that in Pakistan, product market competition has a significant negative impact on investment efficiency. Firm Risk Management is also mediating the relationship in line with the prior study. The result supports agency theory, Schumpeterian viewpoint, and capital allocation theory.

Suggested Citation

  • Sadaf Ali & Ajid ur Rehman & Muhammad Jawad & Munazza Naz, 2024. "Product market competition and investment efficiency nexus with mediating effect of firm risk-taking in Pakistan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(3), pages 488-499, September.
    • Handle: RePEc:pal:ijodag:v:21:y:2024:i:3:d:10.1057_s41310-023-00211-6
    DOI: 10.1057/s41310-023-00211-6
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