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Article
Publication date: 27 April 2020

Affaf Asghar, Seemab Sajjad, Aamer Shahzad and Bolaji Tunde Matemilola

Corporate governance (CG) is an ongoing interesting topic getting the attention of market participant, business regulators and researchers in today’s business environment. The…

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Abstract

Purpose

Corporate governance (CG) is an ongoing interesting topic getting the attention of market participant, business regulators and researchers in today’s business environment. The purpose of this study is to analyze the moderating role of earnings management on CG-value and CG-risk relationship in the emerging economy of Pakistan.

Design/methodology/approach

A panel data analysis is used in this study. A panel data of 71 non-financial listed companies of Pakistan for the 2008-2017 period is considered for this study. Secondary data is collected from the annual reports of non-financial firms listed on PSX. Seven econometric equations are developed to test the research hypothesis.

Findings

The results reveal that CG significantly enhances the firm value and performance measures. Moreover, CG mitigates the practices of earning management and eliminates the risk that develops opportunistic behavior among managers to commit frauds.

Practical implications

The results of this study suggest that the board of directors (BODs) should intensify their governance role and ensure that the executives perform their duties to maximize the wealth of the shareholders and not engage in any misrepresentation of accounts that may lower the company position and decrease the firm value. Moreover, the managers should be informed about their accountability and acknowledged that at the end of the year, they would be audited by an expert’s auditors for their responsibilities. Concerning regulatory bodies, regulatory authorities should ensure that there must be at least one independent member on the board. The better-governed system reduces both agency conflicts and enhances firm value.

Originality/value

A number of studies have already been undertaken by multiple investigators to build connection among CG with firm performance, but there is not even a single study in the literature that considers CG, firm value, firm Risk and discretionary earning management as a whole in one model to generalize its results in the emerging economy of Pakistan. A fundamental element of current analyzation process addresses that this is the very first graft of study conducted in Pakistan having combination of four variables together in one revision. There is minimal work that focuses on moderating effects of earning management on the CG-value and CG-risk relationships. This study uses two standard measures of firm performance (i.e. ROA and Tobin’s Q), one proxy of earning management (DEM) and three attributes of CG (board size, audit quality and ownership structure). Previously, researchers have not investigated a model that combines variables (CG as independent and Firm performance and Firm Risk as dependent along with DEM as moderator) in a single study.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 31 July 2023

Amer Sohail, Zohaib Butt, Affaf Asghar Butt and Aamer Shahzad

This study examines the effect of business group affiliations on corporate cash holdings and how political connectedness modifies the relationship between business group…

Abstract

Purpose

This study examines the effect of business group affiliations on corporate cash holdings and how political connectedness modifies the relationship between business group affiliations and corporate cash holdings.

Design/methodology/approach

The multiple ordinary least square regression with year dummies is used to estimate the effect of business groups on cash holdings. For moderating, the multiplicative term is used. The data from 252 non-financial firms listed on Pakistan Stock Exchange were collected for the analysis from 2010 to 2018.

Findings

The findings show that business group affiliations negatively affect corporate cash holdings, and political connection positively moderates this relationship. Business group firms that are politically connected hold less cash. The firm-specific factors such as leverage, size, cash flow, and dividend dummy also significantly affect corporate cash holdings.

Practical implications

The results imply that affiliated companies have lessened financing frictions and improved stability in their expected future cash flows. Moreover, the results indicate that political connection minimizes the opportunity and agency costs linked to cash holdings.

Originality/value

This study contributes to the existing literature by examining the moderating role of political affiliations on the relationship between business groups and cash holdings in the emerging market.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 17 June 2021

Salah U-Din, Mian Sajid Nazir and Aamer Shahzad

In the last few decades, the frequency and intensity of extreme weather events have increased in most parts of the world including Canada because of global warming. The global…

Abstract

Purpose

In the last few decades, the frequency and intensity of extreme weather events have increased in most parts of the world including Canada because of global warming. The global warming in Canada is about double the magnitude of global warming; therefore, policymakers are concerned about the potential significant impact of the weather catastrophes on the economy and financial sector. The purpose of this study is to explore the impact of weather catastrophes on the Canadian banking sector.

Design/methodology/approach

Using a sample of banking firms from Canada over the period 1988–2019, the present study estimates different econometric techniques to investigate the impact of weather catastrophes on the risk and performance of Canadian banks.

Findings

Analyses of the study do not find a significant impact of the weather catastrophes on the performance of the Canadian banks; however, it has helped banks to lower their risk level and improve stability due to proactive risk management. The findings of this study are not consistent with concerns of the policymakers about climate risk to the Canadian bank sector. More sector-specific research and policy initiatives are recommended to minimize the future financial risk of the increased frequency and intensity of natural disasters.

Originality/value

The study contributes to support the notion that the climate risk of banks is protected with insurance and reconstruction activities provide more banking opportunities.

Details

Journal of Economic and Administrative Sciences, vol. 39 no. 2
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 13 December 2022

Affaf Asghar Butt, Sayyid Salman Rizavi, Mian Sajid Nazir and Aamer Shahzad

This study aims to examine the effect of corporate derivatives use on firm value and how the corporate governance index modifies this relationship.

Abstract

Purpose

This study aims to examine the effect of corporate derivatives use on firm value and how the corporate governance index modifies this relationship.

Design/methodology/approach

The sample consists of 219 nonfinancial firms on the Pakistan Stock Exchange (PSX) from 2011 to 2019. The study used ordinary least square regression with year and industry dummies for estimations. Multiple estimation models such as fixed/random effect, Fama–MacBeth and two-stage least squares (2SLS) are used for robustness. Finally, the PROCESS macro tool is used to estimate the effect of moderating the role of corporate governance (CG) as robustness.

Findings

The findings show that derivatives use has an inverse influence on firm value. The firms did not use derivatives as a risk management tool but for speculation motives. However, the corporate governance index significantly weakens this relationship. However, strong governance forces the managers to use derivatives for hedging purposes. The firm-specific factors, including size, age, leverage, cash, financial distress cost, dividend and growth opportunities, also significantly influence firm value. The findings are robust to the other estimation models.

Research limitations/implications

The findings indicate that emerging economies like Pakistan are more prone to agency problems. The strong corporate governance structure helps firms turn the speculative motive of derivatives use into hedging purposes and mitigate the agency issues.

Practical implications

This empirical evidence suggests that good governance structures can help improve the impact of derivative usage on firm value.

Originality/value

To the best of the author's knowledge, this is the first study that examines the conditional role of corporate governance on the derivatives–value relationship from the viewpoint of agency problem/speculative motive.

Details

South Asian Journal of Business Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2398-628X

Keywords

Article
Publication date: 7 September 2020

Omer Farooq Malik, Asif Shahzad, Aamer Waheed and Zarash Yousaf

Drawing on affective events theory, the authors investigated whether exposure to abusive supervision triggers malevolent creativity among victims and the role of psychological…

1471

Abstract

Purpose

Drawing on affective events theory, the authors investigated whether exposure to abusive supervision triggers malevolent creativity among victims and the role of psychological contract violation (PCV) as a mediator in this relationship. The authors also examined the moderating effects of the Light Triad personality traits comprising Kantianism, humanism and faith in humanity.

Design/methodology/approach

The sample comprised 297 junior doctors working at various clinical departments of public sector hospitals in three major cities of Pakistan. Data were collected using a self-administered questionnaire and the hypothesized model was tested using the covariance-based structural equation modeling in Mplus.

Findings

Results demonstrated that abusive supervision influences malevolent creativity directly and indirectly mediated through PCV. Further, results showed that individuals high on the Light Triad traits are less likely to engage in malevolently creative acts in response to abusive supervision and feelings of violation than those low on the Light Triad.

Originality/value

The authors contribute to the literature by demonstrating that exposure to abusive supervision influences the generation of malevolently creative ideas among subordinates. Further, the authors showed that subordinates high on the Light Triad handle abusive supervisory behaviors and negative emotional reactions more productively and are less likely to retaliate against perceived mistreatment compared to their counterparts.

Details

Leadership & Organization Development Journal, vol. 41 no. 8
Type: Research Article
ISSN: 0143-7739

Keywords

Book part
Publication date: 17 August 2011

Riaz Ahmed Shaikh

Pakistan's present war against extremists has many folds and sheds. The country's initial participation in the Afghan War in 1979 later gave birth to different extremist trends in…

Abstract

Pakistan's present war against extremists has many folds and sheds. The country's initial participation in the Afghan War in 1979 later gave birth to different extremist trends in the country. State patronage of the extremist Wahabi Islamists during the Afghan jihad opened another conflict in Pakistan, and things became more complicated. The combination of external and internal factors gave birth to the worst kind of conflict, which now has not only become dangerous for the country's own existence but also a major threat for global peace. The Afghan jihad initially started as a war against Soviet occupation and later became the hub of global jihad-war against infidels.

This chapter analyzes how external factors promoted internal contradictions in Pakistan due to which the country became not only an exporter of jihadis for the world but also the worst kind of sectarian conflicts, including. Shia–Sunni, Deobandi–Wahabi clashes, entered into in the past two decades. Such a strong link exists with Pakistan's official support to global jihad. Draft sectarian groups now head to head with their opponents have killed thousands of members of rival sectors, have strong support from external sympathizers, and have spread in the country. The well planned terrorist activities of these groups reflect the fact that support to these groups in the past is now leading to a severe crisis in Pakistan. The nexuses of these indigenous extremists like Lashkar-e-Jhangvi, Lashkar-e-Taiba, Tehrik-e-Taliban Pakistan, and Hizb-ul-Mujahideen with external terrorist organizations like Al-Qaeda, the Taliban, and Islamic Movement of Uzbekistan of Tahir Yuldasher Chechen Guerilla War has led to several bloody clashes in the country and outside.

Details

Governance, Development and Conflict
Type: Book
ISBN: 978-0-85724-896-1

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