IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v10y2022i1p2106628.html
   My bibliography  Save this article

Impact of firm characteristics and ownership structure on firm efficiency: evidence from non-financial firms of Pakistan

Author

Listed:
  • Shafaat Muhammad Habib
  • Haroon Hussain
  • Mamdouh Abdulaziz Saleh Al-Faryan
  • Rana Yassir Hussain

Abstract

This study aims to examine the impact of firm characteristics and ownership structure on the firm efficiency of listed non-financial firms in Pakistan from 2012 to 2017. Firm characteristics include market capitalization, cash holdings, book-to-market ratio and negative book-to-market ratio and ownership structure includes insider ownership, institutional ownership and concentration ownership while controlling for firm size, profitability, leverage and age. Data related to firm efficiency, cash holdings, book-to-market ratio and negative book-to-market ratio was collected from Financial Statement Analysis published by SBP whereas data related to market capitalization and ownership structure (insider ownership, institutional ownership and concentration ownership) was collected from business recorder and published annual reports respectively. At first stage the firm efficiency is reported by using DEA CRS approach and results show that the year 2014 was the best year because 24% firms were efficient and 2015 was the worst because only 18% firms were efficient. The results also show that textile, sugar, food, manufacturing, chemical & pharmaceuticals, cement, motor vehicle, information communication & transportation are the poor performing sectors of Pakistan. This inefficiency might be due to the inefficient use of resources as agency theory advocates. Then at second stage, the correlation and variance inflation factor did not show any multicollinearity. Tobit model is used to find the regression results. The regression results show that market capitalization, cash holdings and concentration ownership positively and significantly influence the firm efficiency. Negative book-to-market ratio, insider ownership and institutional ownership negatively and significantly influence the firm efficiency whereas the book-to-market ratio is insignificant with the firm efficiency. It might be due to the self-interest by the insider and institutional ownership. This study is also helpful for the investors. They can choose the efficient firm for investment and to avoid the inefficient firms to stay away from the losses.

Suggested Citation

  • Shafaat Muhammad Habib & Haroon Hussain & Mamdouh Abdulaziz Saleh Al-Faryan & Rana Yassir Hussain, 2022. "Impact of firm characteristics and ownership structure on firm efficiency: evidence from non-financial firms of Pakistan," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2106628-210, December.
    • Handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2106628
    DOI: 10.1080/23322039.2022.2106628
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2022.2106628
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23322039.2022.2106628?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Panduru Dan Andrei & Simion Petronela Cristina & Ioanid Alexandra, 2024. "Measuring Operational Efficiency: A Functional Analysis of Core and Non-Core Activities in a Leading Romanian Oil and Gas Retail Company," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 1335-1347.
    2. Chaeho Chase Lee & Erdal Atukeren & Hohyun Kim, 2024. "Knowledge Capital and Stock Returns during Crises in the Manufacturing Sector: Moderating Role of Market Share, Tobin’s Q, and Cash Holdings," Risks, MDPI, vol. 12(6), pages 1-23, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2106628. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.