Product market competition and investment efficiency nexus with mediating effect of firm risk-taking in Pakistan

Sadaf Ali (), Ajid ur Rehman (), Muhammad Jawad () and Munazza Naz ()
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Sadaf Ali: Riphah International University
Ajid ur Rehman: Riphah International University
Muhammad Jawad: HITEC University
Munazza Naz: Fatima Jinnah Women University

International Journal of Disclosure and Governance, 2024, vol. 21, issue 3, No 10, 488-499

Abstract: Abstract The objective of this paper is to analyze the impact of the product market competition on investment efficiency with the mediating effect of Firm Risk Management through a dynamic panel estimation model. The sample consists of 260 non-financial firms listed on the Pakistan stock exchange for the period of 2010–2022. In addition, this paper analyzes the data through the mediation technique as per a review of the prior literature. Investment efficiency is the primary function of corporate finance. Pakistan being an emerging country is mostly owned by the family-owned business. These businesses have different policies as compared to non-family-owned businesses. This is the empirical indication that product market competition decreases investment efficiency in an emerging economy. The result reveals that in Pakistan, product market competition has a significant negative impact on investment efficiency. Firm Risk Management is also mediating the relationship in line with the prior study. The result supports agency theory, Schumpeterian viewpoint, and capital allocation theory.

Keywords: Product market competition; Investment efficiency; Firm risk management; Agency theory (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41310-023-00211-6

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