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Business Group Affiliation and Firm Performance—Evidence from Pakistani Listed Firms

Author

Listed:
  • Waseemullah

    (University of Gurjat, Gurjat.)

  • Arshad Hasan

    (Capital University of Science and Technology, Islamabad.)

Abstract

This study analyses the financial performance of business group affiliated firms relative to stand-alone firms in Pakistan. The investigations are done across the sample period of 1993-2012. The study employs ‘Chop shop’ methodology to construct the excess values (performance measure); in order to compare the results with earlier well documented studies of both developed and emerging countries. Both univariate and regression analyses clearly demonstrate that group affiliated firms are trading at discount (underperform relative to stand-alone firms) during the sample period. Despite the historical success in the past, the findings suggest that business groups evolve differently in the post financial reforms and privatisation programs era. The findings are consistent with the market failure argument and agency theory. However, the study finds a little evidence of efficient internal markets of Pakistani business groups.

Suggested Citation

  • 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.
  • Handle: RePEc:pid:journl:v:57:y:2018:i:3:p:351-371
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    File URL: http://www.pide.org.pk/pdf/PDR/2018/Volume3/351-371.pdf
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    References listed on IDEAS

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