The Impact of Institution Ownership on Firm Leverage of Non-Financial Firms Pakistan Stock Exchange (PSE)

Muhammad Aqib Hameed
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Muhammad Aqib Hameed: MBA Finance Student, Institute of Business Management Sciences (IBMS), The Agriculture University of Peshawar, Pakistan

Bulletin of Business and Economics (BBE), 2024, vol. 13, issue 3, 333-337

Abstract: This study examines the influence of ownership structures on firm leverage and value among non-financial firms listed on the Pakistan Stock Exchange (PSE). Moreover, this study aims to offer actionable insights for investors to select utmost effective ownership structures for making good strategic investment decisions. The empirical analysis of this study examines (20) non-financial firms Pakistan Stock Exchange (PSE) over 2015-2018. This research employs panel data techniques such as chow test, Breusch-Pagan test, and Hausman test, Pooled Ordinary Least Squares (OLS) elect suitable econometric model. Variables of this study leverage dependent variable, institutional ownership independent variable and control variables are managerial ownership, ownership concentration, female in board, MTB ratio, firm size and firm age. The empirical analysis shows that institutional ownership is inverse significant associated with firm leverage. The control variables are ownership concentration, audit committee, and negative and insignificant association with firm leverage. No. of board, MTB, and Firm Size have a negative significant association with firm leverage. Whereas, Non-Executive Director, Audit Committee Non-Executive Director, HR Committee, HR Non-Executive Committee and Firm age have positive insignificant association with firm leverage. The findings of this study highlighted the crucial role of strong corporate governance in sustaining lower leverage ratios. Effective corporate structures, noticeable by significant institutional ownership and active governance, assist to reduce agency conflicts and improve firm value.

Keywords: Institutional Ownership; Leverage; Random Effect Model; Pakistan Stock Exchange (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:13:y:2024:i:3:p:333-337

DOI: 10.61506/

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