Open AccessBusiness Group Affiliation and Firm Performance—Evidence from Pakistani Listed Firms
Author(s) -
Waseemullah,
Arshad Hasan
Publication year - 2018
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v57i3pp.351-371
Subject(s) - argument (complex analysis) , sample (material) , agency (philosophy) , order (exchange) , univariate , corporate group , construct (python library) , principal–agent problem , business , value (mathematics) , business cycle , economics , financial economics , accounting , finance , macroeconomics , corporate governance , biochemistry , chemistry , statistics , mathematics , chromatography , multivariate statistics , machine learning , computer science , programming language , philosophy , epistemology
This study analyses the financial performance of businessgroup affiliated firms relative to stand-alone firms in Pakistan. Theinvestigations are done across the sample period of 1993-2012. The studyemploys ‘Chop shop’ methodology to construct the excess values(performance measure); in order to compare the results with earlier welldocumented studies of both developed and emerging countries. Bothunivariate and regression analyses clearly demonstrate that groupaffiliated firms are trading at discount (underperform relative tostand-alone firms) during the sample period. Despite the historicalsuccess in the past, the findings suggest that business groups evolvedifferently in the post financial reforms and privatisation programsera. The findings are consistent with the market failure argument andagency theory. However, the study finds a little evidence of efficientinternal markets of Pakistani business groups. Keywords: BusinessGroups, Group Affiliation, Excess Value, Market Failure Theory, AgencyTheory, Chop Shop Methodology