Ownership Structure of Family Business Groups of Pakistan

Hussain, Shahid; Safdar, Nabeel

doi:10.20472/efc.2018.009.006

Cited by 10 publications

(9 citation statements)

References 15 publications

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“…The results of Table 3 show that the majority of the sample firms are affiliated with FBG. It counts 57%, which is similar to the studies of Hussain (2019), Hussain and Safdar (2018b) and Khan and Kamal (2022). Moreover, 39% of FBG-affiliated firms have the services of the same audit firms, while almost 50% of the sample firms have the services of BIG4 audit firms.…”

Section: Resultssupporting

confidence: 81%

The same network auditor, family business groups and earnings manipulation: an evidence from emerging market

Khan

Kamal

2023

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Purpose This paper aims to examine whether family business groups’ (FBG) having the same network auditor among their affiliates mitigates earnings manipulation (EM). Design/methodology/approach This paper used unbalanced panel data from the years 2010–2019. The sample of the study is composed of 327 nonfinancial listed Pakistan Stock Exchange firms, consisting of 187 FBG-affiliated firms and 140 nonaffiliated firms. The ordinary least square and generalized least square regressions have been used to check the hypothesized relationship. Furthermore, the propensity score matching technique is used to ascertain comparable companies’ features and to control the potential endogeneity problem. Finally, the results are robust to various measures of EM and FBG’ proxies. Findings The findings of the study show that the same network auditor is reducing EM in FBG affiliates. In addition, the BIG4 same network auditors are also instrumental in constraining EM as compared to non-BIG4 audit firms. Overall, the results of this study depict that the same network auditor in FBG’s affiliated firms significantly influences EM. These results are robust with respect to generalized least squares and the endogeneity problem. Research limitations/implications This research study has two important implications for the interested parties. First, although the authors find in this research study that the same network auditor is negatively associated with EM in the FBG-affiliated firms, however, FBG-affiliated firms might use opportunistically the real activity manipulation. Second, regulators highlight the change in audit partner/firm rotation, though the study findings indicate that regulators and practitioners may consider the benefits associated with the same network auditors for FBG. Originality/value This research study adds a new investigation to previous literature by examining the role of the same network auditors in the EM of the FBG’ affiliates. To the best of the author’s knowledge, this is the first study to bring new knowledge by investigating the role played by the same network auditors along with the BIG4 same network audit firms in constraining EM in FBG.

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Section: Resultssupporting

confidence: 81%

The same network auditor, family business groups and earnings manipulation: an evidence from emerging market

Khan

Kamal

2023

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“…Because of its uniqueness in the Pakistani context, where there is no significantly relevant research on the highlighted issue, this study has implications for both practitioners and academics. Pakistan has a higher concentration of ownership, which adds to the agency issue (Hussain, 2018). It is also significant because the Pakistani market is developing, where various researchers have observed a lack of market efficiency and a variety of cultural, economic and political perspectives predominate.…”

Section: R E T R a C T E Dmentioning

confidence: 99%

Nexus between audit committee and corporate risk: evidence from Pakistan

Noor

Farooq

Tahir

2022

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Purpose The purpose of this study is to investigate the impact of audit committee (AC) characteristics, such as AC size, AC independence and gender diversity on firm risk in the context of an emerging market. Design/methodology/approach The sample data includes 102 nonfinancial Pakistan Stock Exchange listed firms from 2004 to 2018. Firm risk is measured through three proxies, namely, idiosyncratic risk, total risk and capital expenditure. Along with this, profitability, leverage, market-to-book ratio, firm age, net property plant and equipment (NPPE) and surplus cash are used as control variables. The Housman test is used to select the best model from the fixed-effect model and the random effect model to conclude the findings. Findings According to the study's findings, AC characteristics have a negative and significant relationship with idiosyncratic risk. In addition, a gender-diverse AC has a significant negative relationship with capital expenditure. In connection with total risk, AC characteristics fail to shows any significant relationship. Among the control variables, the results show that profitability stand for return on asset (ROA) and NPPE have a significant negative relationship, whereas market-to-book value has a significant positive relationship with both idiosyncratic and total risk. Practical implications The study's findings offer policymakers, managers and investors guidance. This study will provide new insights to the Pakistani Government, stock market, companies and accounting and auditing regulators in terms of understanding the determinants influencing risk management activities. Furthermore, this study will assist financial institutions in making credit decisions. In addition, this study provides policymakers, such as the stand for Securities and Exchange Commission of Pakistan (SECP), with guidelines for developing policies that strengthen the board governance mechanism. Originality/value This study investigates the impact of AC characteristics on corporate risk, which is rarely discussed in emerging economies.

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“…Shaikh, Fei, Shaique, and Nazir [ 66 ] added that Pakistani firms’ ownership structure is unique in the sense that it is enormously concentrated; the reason behind this phenomenon is family ownership. In addition to this, the study of Hussain and Safdar [ 27 ] depicted that in Pakistan most of the firms have concentrated ownership and controlled by business families. Due to family orientation and ownership concentration in Pakistani listed firms, the majority of boards are consisted of family members and relatives.…”

Section: Introductionmentioning

confidence: 99%

Board of directors and earnings manipulation: evidence from regulatory change

et al. 2022

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The purpose of this paper is to examine the effect of the board of directors’ related clauses such as independence, female director, CEO Duality and the expertise of director included in the Code of Corporate Governance 2017 (CCG-2017) on earnings management with the pre- and post-CCG-2017 analysis. This study has used the sample of 323 non-financial listed firms of the Pakistan Stock Exchange from 2015 to 2019. Data were manually collected from companies’ annual reports, and two proxies of earnings management have used: one is discretionary accruals and the other is real activity manipulation. The results of the study show that as compared to the pre-period of CCG-2017 in the post-period of CCG-2017 board independence, expertise and female inclusion has increased significantly. Moreover, board independence and financially expert directors are negatively related to discretionary accruals, while there is a positive relationship of female directors with discretionary accruals, which is also same for real activity manipulation. The findings also show that there is no relationship of board independence/outside directors and expert directors with real activity manipulation. This study recommended the CCG-2017 reforms introduced by the regulator. Moreover, we recommend that the regulator needs to augment the authentic independence of independent/outside directors in listed firms (concentrated ownership context) of Pakistan. This study adds its part in the corporate governance literature by focusing board attributes with regulatory reforms on earnings manipulation, which is lacking in the related literature in general and in Pakistan an emerging economy in particular.

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Ownership Structure of Family Business Groups of Pakistan

Cited by 10 publications

References 15 publications

The same network auditor, family business groups and earnings manipulation: an evidence from emerging market

The same network auditor, family business groups and earnings manipulation: an evidence from emerging market

Nexus between audit committee and corporate risk: evidence from Pakistan

Board of directors and earnings manipulation: evidence from regulatory change

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