The Effect of a Complex Ownership Structure and Judicial Efficiency on Leverage: Evidence from Pakistani Listed Companies

Muhammad Hashim Shah, Xiao Zuoping, Abdullah and Muhammad Kashif Shah

Emerging Markets Finance and Trade, 2018, vol. 54, issue 10, 2258-2277

Abstract: We explore the impact of complex ownership structure and judicial efficiency on firm leverage at Pakistani pyramid firms. Ratio of controlling to ownership rights is much higher at Pakistani firms than in other economies, which motivates us to study its impact on leverage. Our results reveal that complex internal structure at Pakistani pyramid firms is positively related to leverage. We find that the presence of efficient courts weaken the impact of complex ownership structure on leverage at pyramid firms. Contrary to the literature, we find that the political connections of pyramid firms in Pakistan are not related to corporate leverage.

Date: 2018
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DOI: 10.1080/1540496X.2018.1469404

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