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Proprietorship Structure and Firm Performance in the Context of Tunneling: An Empirical Analysis of Non-Financial Firms in Pakistan

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  • Sulehri, Fiaz Ahmad
  • Ali, Amjad

Abstract

This study has investigated the majority shareholder's practice to use minority shareholders’ wealth without their consent which influence the performance of firms in Pakistan from 2009 to 2020. The firm performance has been taken as an explained variable, whereas ownership concentration, inside ownership, firm size, leverage, and investment growth are considered explanatory variables. Descriptive statistics, correlation matrix, Hausman test, and random effect model have been used for empirical analysis. The study used a sample of 24 firms with a total of 288 observations to look at how ownership concentration, inside ownership, leverage, and sales growth affect firm performance. The ownership concentration, firm size, and investment growth have a positive and significant impact on firm performance, whereas inside ownership and leverage have a negative and significant influence on the performance of selected non-financial firms. The larger the gap between ownership and control, the more likely it is that company resources will be tunneled. So, it has been suggested to the securities and exchange commission of Pakistan to frame strict rules and regulations to stop the role of inside ownership because it influences firm performance adversely.

Suggested Citation

  • Sulehri, Fiaz Ahmad & Ali, Amjad, 2022. "Proprietorship Structure and Firm Performance in the Context of Tunneling: An Empirical Analysis of Non-Financial Firms in Pakistan," MPRA Paper 115899, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115899
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    4. Sulehri, Fiaz Ahmad & Ali, Amjad, 2023. "Beyond the Balance Sheet: Analyzing the Relationship between Corporate Governance, Financial Performance, and Stock Prices in Pakistan's Non-Bank Financial Industry," MPRA Paper 120123, University Library of Munich, Germany.

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    More about this item

    Keywords

    firm performance; insider ownership; tunneling;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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