Purpose-This paper aims to investigate the effect of political connections on earnings quality by simultaneously controlling the firm characteristics; to test whether Pakistani firms' ownership, specifically family ownership, plays a significant role in political connections-earnings quality association; to draw a conclusion about the agency theory in the context of Pakistan.

PurposeThe study analyzes the influence of corporate governance and ownership concentration levels on the cost of equity. Further, the authors extend the literature by investigating the moderating effect of ownership concentration levels (i.e. at 5%, 10% and 20%) on the relationship between corporate governance and the cost of equity.Design/methodology/approachThe study applies several robust panel regression techniques to a sample of 114 active non-financial companies listed on the Pakistan Stock Exchange from 2011 to 2016. Corporate governance was measured through a unique index comprising 30 governance attributes. The cost of equity was measured through the capital asset pricing model. Further, the authors construct three variables for ownership concentration levels, i.e. at 5%, 10% and 20%. To address the endogeneity problem, the one-lagged variable model and GMM approaches were also applied.FindingsThe results indicate that better corporate governance reduces the cost of equity, while ownership concentration at high thresholds would increase the cost of equity. Further, the authors find that ownership concentration at the 20% threshold moderates the relationship between corporate governance and the cost of equity. Thus, the authors argue that firms can minimize the risk faced by shareholders by implementing substantive corporate governance mechanisms. In addition, effective corporate governance mechanisms at high ownership concentration levels are imperative for managing the cost of equity.Originality/valueThe study reports novel evidence that ownership concentration at a high threshold moderates the effect of corporate governance on the cost of equity.

Purpose This study aims to analyze whether family ownership and working capital management (WCM) affect firm profitability and liquidity. Further, we also investigate the moderating effect of family ownership on the association between WCM, firm profitability and liquidity. Design/methodology/approach This study uses a sample of 150 nonfinancial companies listed on the Pakistan Stock Exchange for the period 2014–2019. For empirical analysis, this study used multiple proxies of family ownership and applied robust and bootstrapped quantile regression models. Findings The results suggest that family ownership has a negative association with firm profitability and liquidity. Moreover, this study finds a positive association between WCM and firm profitability and liquidity. Furthermore, the results indicate that family ownership negatively moderates the association between WCM and firm profitability. In addition, we argue that family ownership rescinds the impact of WCM as excess liquidity may be used for extracting private benefits and related party transactions. Originality/value First, this study has examined the nexus between family ownership, WCM, firm profitability and liquidity in the context of a developing country, i.e. Pakistan. Second, previous studies have not analyzed the moderating role of family ownership in the association between working capital management, firm profitability and liquidity. Third, this study provides unique evidence that family-owned firms have an adverse liquidity position as compared with other firms.

The increasing dependence of South Asian countries on international remittances (IRM) and international tourism development (ITR) in the presence of political uncertainties has attracted scholars' attention. Although the largest receiver of IRM, South Asia fails to channel these funds to the tourism industry, which continues to operate below its potential. This study estimates the impact of IRM, political stability (PS), and their interaction with foreign direct investment (FDI) and relative price (RP) on ITR in South Asia. We used a balanced panel dataset of six South Asian countries from 1996 to 2020. We applied the pooled ordinary least squares (POLS), fixed effects (FE), feasible generalized least squares (FGLS), and Prais-Winsten regression with panel-corrected standard errors (PCSE), to estimate the results. The study discovered quite interesting and surprising results between IRM and ITR. The results suggest a statistically significant negative impact of IRM on ITR in South Asia, implying that the recipients of IRM tend to spend most of it on their basic level consumption needs and do not have incentives to save and invest. Further, the results suggest that PS positively moderates the relationship between IRM and ITR, suggesting that IRM will be channelized to the tourism sector if domestic investors expect low political risks in the region. In addition, the results indicate that PS and FDI have a statistically significant positive effect on ITR in South Asia. Moreover, RP has a negative and significant impact on ITR, implying that international tourists prefer cheaper destinations. This study provides crucial implications for South Asian economies. First, effective public policies are specifically designed for channelling IRM and FDI, focusing on enhancing the tourism industry's infrastructure. Second, PS is necessary for ITR and domestic investors to invest IRM in the tourism sector. Thus, policymakers must consider political factors while designing tourism policies and strategies. Third, the findings highlight the significance of price competitiveness for developing the tourism industry. Hence, we argue that policymakers should implement effective economic policies to stabilize regional prices to attract international tourists.

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