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Business Groups’ Financial Performance: Evidence From Pakistan

Author

Listed:
  • WaQar I. Ghani
  • Omair Haroon
  • Junaid Ashraf

Abstract

We examine comparative financial performance of business groups in Pakistan employing samples of firms listed on the Karachi Stock Exchange. Our descriptive results show that group firms are larger in size and have higher operating profits. Group firms also exhibit lower sales growth variability over a five year period than non-business group firms. Our statistical analysis reveals that business group firms have significantly higher liquidity and significantly lower financial leverage than the non-business group firms. More importantly, business group firms are more profitable (higher ROA) than non-group firms. Our results based on superior financial performance of business groups indicate that business groups in Pakistan are efficient economic arrangements that substitute for missing or inefficient outside institutions and markets, hence supporting the market failure argument.

Suggested Citation

  • WaQar I. Ghani & Omair Haroon & Junaid Ashraf, 2011. "Business Groups’ Financial Performance: Evidence From Pakistan," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(2), pages 27-39.
    • Handle: RePEc:ibf:gjbres:v:5:y:2011:i:2:p:27-39
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    Citations

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    Cited by:

    1. Sattar Khan & Yasir Kamal & Shahid Hussain & Muhammad Abbas, 2022. "Corporate governance looking back to look forward in Pakistan: a review, synthesis and future research agenda," Future Business Journal, Springer, vol. 8(1), pages 1-32, December.
    2. Waseemullah & Arshad Hasan, 2018. "Business Group Affiliation and Firm Performance—Evidence from Pakistani Listed Firms," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 57(3), pages 351-371.

    More about this item

    Keywords

    Business Group; Financial Performance; Emerging Economy; Pakistan.;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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