The purpose of this paper is to examine the role of external auditors in potentially approving or limiting a firm’s earnings management practices in institutional settings which do not provide incentives for auditors to deliver high audit quality. We use signed discretionary and performance-adjusted discretionary accruals as proxies for earnings management, and audit firm size (Big 4 vs. Non-Big 4) and audit opinion type (Qualified vs. Unqualified) as measures for audit quality. Using a sample of 183 firms listed on the Karachi Stock Exchange, Pakistan for the five-year period from 2009 to 2013, we find that there is statistically no significant difference between earnings management activities of firms audited by Big 4 and non-Big 4 auditors. Audit opinion is not being issued in response to the earnings management activities being employed by firms. Further consistent with the entrenchment hypothesis, we find that earnings management is pervasive in family controlled firms and Big 4 auditors do not moderate the relation between family firm dominance and earnings management. A small audit market coupled with non-existent litigation risk, strong economic bonding of auditors with their clients, lower investor protection, poor enforcement mechanisms and dominance of firms by influential family groups lead auditors to behave opportunistically, which undermines their independence and objectivity.

The objective of the study is to examine the long-term relationship between gold prices and KSE-100 index of the Karachi stock market Pakistan. For the foreign and domestic capital investors, it is assumed that the gold is the safest heaven for making investment. On the other handstock markets are considered highly volatile. This study uses monthly data of two hundred forty eight months from October 1993 to May 2014. Time-series data of both variables Karachi Stock Exchange 100 index (KSE-100) and gold prices have been collected from the official website of Karachi stock market and Forex.com. To achieve the aims of the study, several econometric tests have been applied such as unit root test by using Augmented Dickey-Fuller test, Johnson Co-integration test and Vector Auto-regressive Model (VAR). This study finds that there is no long-run relationship between KSE 100 index and gold prices. It is concluded investors should not consider KSE 100 index and gold prices as close alternatives rather they should make their decisions on subjective knowledge by aligning them with empirical evidence. While making decisions about gold prices last month’s price must be taken into consideration because current gold price is significantly influenced by last month’s gold price. Whilst making decision regarding KSE 100 index last two months’ fluctuations taken into consideration.

Separation of ownership and control plays a significant role in determining the agency cost, and there are many consequences of this agency problem. The control-enhancing mechanisms enhance control of controlling shareholders who expropriate small shareholders. Controlling shareholders are different in different countries; majorly, family firms are controlling firms in Pakistani context. The use of control-enhancing mechanism is rampant in emerging economies, and even some developed countries, related research especially in Pakistan requires evidence. This study exhibits a pooled cross-sectional analysis of listed companies in Pakistan between 2005 and 2016. In this research, we have examined the influence of control-enhancing mechanisms on firms’ earnings management and which mechanism (pyramid control, multiple control chains, and cross-holding control) is significantly influencing the earnings management of firms. We have analyzed both types of earnings manipulation techniques (accrual and real earning management). Our results explicate that the pyramid control and multiple control chain mechanisms are significantly positively related to the accruals earning management and real earnings management, unveiling that firms with these controls manipulate earnings with discretionary accruals as well as with real activity manipulation. Real activity manipulation enhances firms to overproduce the inventory (decreasing the unit price) and to reduce the discretionary expenses (increasing the reported earnings).

The purpose of this study is to examine the impact of social relations among the board members on earnings management in Pakistani listed companies. Specifically, we have analyzed the social networks between CEO and outside board members. The modified Jones model has been used in this study to measure earnings management and we have captured social relations through SOCIAL (Social networking index). Our results suggest that firms with more connected boards show a positive relationship between board independence and earnings management. Further, we have shown that firms with CEO duality exhibit a higher association between social connections of the board and earnings management than firms with non-duality. Social relations among the board members undermine monitoring ability of outside directors and the impact becomes more severe in the presence of CEO duality.

As a symbol of Pak-China Friendship and the flagship project of One Belt One Road (OBOR), China-Pakistan Economic Corridor (CPEC) is building the future of Pakistan. Thus, the purpose of this study is to evaluate the current and future performance of CPEC. To achieve the said purpose, we used published data from the official website of CPEC. By using Corridor Performance Indicators (CPI) techniques presented by Kunaka, C., & Carruthers, R. (2014), we found that the current performance of CPEC is pretty well. Based on the facts, we are also hoping that the future economic performance of CPEC will also viable and sustainable. Therefore, we can conclude the discussion by saying that CPEC is no doubt the lifeline for the economy of Pakistan.