IDEAS home Printed from https://ideas.repec.org/p/eab/microe/22263.html
   My bibliography  Save this paper

Family Business Groups and Tunneling Framework : Application and Evidence from Pakistan

Author

Listed:
  • Atif Ikram

    (LUMS)

  • Syed Ali Asjad Naqvi

Abstract

In Pakistan there is a ubiquity of firms in which there exists a controlling shareholder, usually in the form of the family. By and large this control is maintained via crossshareholding and inter-locked directorships which in turn is facilitated by the pyramidal organization of these firms. Moreover, these controlling families have often been alleged of tunneling resources from firms in which they have few cash flow rights to ones in which they have more cash flow rights. This paper attempts to quantify the extent of tunneling prevalent in Pakistani family business groups. The framework that is adopted is one that has been presented by Mullainathan et al. (2000) : we use the responses of different firms to performance shocks and map out the flow of resources within a group of firms to quantify the extent to which the marginal rupee is tunneled. We apply this technique to data on Pakistan business groups.

Suggested Citation

  • Atif Ikram & Syed Ali Asjad Naqvi, 2005. "Family Business Groups and Tunneling Framework : Application and Evidence from Pakistan," Microeconomics Working Papers 22263, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:22263
    as

    Download full text from publisher

    File URL: http://www.eaber.org/node/22263
    Download Restriction: no

    References listed on IDEAS

    as
    1. Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting out Tunneling: An Application to Indian Business Groups," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 121-148.
    2. Maitreesh Ghatak & Raja Kali, 2001. "Financially Interlinked Business Groups," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 591-619, December.
    3. Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, vol. 59(2), pages 537-600, April.
    4. Amjad,Rashid, 2008. "Private Industrial Investment in Pakistan," Cambridge Books, Cambridge University Press, number 9780521053617, May.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. Morck, Randall & Shleifer, Andrei & Vishny, Robert W, 1989. "Alternative Mechanisms for Corporate Control," American Economic Review, American Economic Association, vol. 79(4), pages 842-852, September.
    7. Tarun Khanna & Krishna Palepu, 2000. "Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups," Journal of Finance, American Finance Association, vol. 55(2), pages 867-891, April.
    8. Stijn Claessens & Joseph P. H. Fan, 2002. "Corporate Governance in Asia: A Survey," International Review of Finance, International Review of Finance Ltd., vol. 3(2), pages 71-103.
    9. Amjad, Rashid, 1984. "The management of Pakistan's economy 1947-82," MPRA Paper 35850, University Library of Munich, Germany.
    10. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    11. Wenyi Chu, 2004. "Are Group-Affiliated Firms Really More Profitable than Nonaffiliated?," Small Business Economics, Springer, vol. 22(5), pages 391-405, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Randall Morck & Bernard Yeung, 2009. "Never Waste a Good Crisis: An Historical Perspective on Comparative Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 145-179, November.
    2. Ishtiaq AHMAD & Syed Zaheer ABBAS KAZMI, 2016. "A Financial Performance Comparison Of Group And Non-Group Firms In Textile Sector Of Pakistan," Network Intelligence Studies, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 8, pages 143-150, December.

    More about this item

    Keywords

    Pakistan; tunneling; business groups; crossshareholding;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:microe:22263. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong). General contact details of provider: http://edirc.repec.org/data/eaberau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.