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This study analyzes the effect of control enhancing mechanisms (CEMs) on a firm's innovation activities. In the light of conflicting theoretical prophecies on the role of ultimate control, we analyze the ownership concentration by examining the cash flow and control rights deviation which embolden ultimate owners to expropriate. Empirical evidence suggests that CEMs have a negative effect on core and base innovation, although the effect is severe in intermediate aged firms and largest sized firms. These findings are robust in different specifications and have significant implications for policymakers.
Ruqia Shaikh; Zhiqiang Li; Xiaoli Wang; Muhammad Rizwan Nazir. Firm innovation and ultimate control mechanism: Case of emerging market. Managerial and Decision Economics 2021, 1 .
AMA StyleRuqia Shaikh, Zhiqiang Li, Xiaoli Wang, Muhammad Rizwan Nazir. Firm innovation and ultimate control mechanism: Case of emerging market. Managerial and Decision Economics. 2021; ():1.
Chicago/Turabian StyleRuqia Shaikh; Zhiqiang Li; Xiaoli Wang; Muhammad Rizwan Nazir. 2021. "Firm innovation and ultimate control mechanism: Case of emerging market." Managerial and Decision Economics , no. : 1.
This research study analyzes the variation in monthly returns of securities for companies listed in Pakistan Stock Exchange-PSX (Formerly known as KSE). The Capital Asset Pricing Model (CAPM) of SLB has provided a method for researchers and experts to forecast the risks and returns. The main purpose of CAPM is to estimate beta of security to explain how much security is aligned or sensitive with the movement or changes in the market return. The research is conducted by means of monthly market capitalization of companies; portfolios are formed and the role of idiosyncratic risk in explaining the variations in the stock returns have been studied. With the same portfolios, the relationship of risk and return relationship has also been analyzed. This empirical analysis is conducted for the period of May 2010 - April 2014. Data analysis reveal that the idiosyncratic risk is a significant factor in explaining the stock returns. Capital Asset Pricing model is rejected in this study context because of positive and significant intercept in all portfolios. The research findings strongly support Chan and Chui (1996) and Strong and Xu (1997), assertions that the relationship between beta and security returns is weak. Therefore, CAPM is an empirically anemic model to be used in the Pakistani market.
Ruqia Shaikh; Sarfaraz Ahmed Shaikh; Muhammad Usman. Two-Pass Model of CAPM: Evidence from Pakistan Stock Exchange. Journal of Business Strategies 2020, 12, 125 -144.
AMA StyleRuqia Shaikh, Sarfaraz Ahmed Shaikh, Muhammad Usman. Two-Pass Model of CAPM: Evidence from Pakistan Stock Exchange. Journal of Business Strategies. 2020; 12 (2):125-144.
Chicago/Turabian StyleRuqia Shaikh; Sarfaraz Ahmed Shaikh; Muhammad Usman. 2020. "Two-Pass Model of CAPM: Evidence from Pakistan Stock Exchange." Journal of Business Strategies 12, no. 2: 125-144.
The study investigates the dynamism of working capital requirement (WCR) in non-financial firms listed on the Pakistan Stock Exchange from the period of 2007 to 2013. The purpose of this research is to analyze whether firms follow the target WCR, to estimate the speed with which firms adjust towards its target WCR and to investigate the firm-specific and macroeconomic determinants of WCR. Difference GMM technique is used to analyze the speed and determinants of WCR to avoid the problems of endogeneity and unobservable heterogeneity. The study gives evidence that there is an existence of target WCR in firms of Pakistan and firm require 1.6 years to completely adjust back to target WCR. The factors which are statistically significant in the determination of WCR are the level of economic activity in the country, operating cash flow, profitability, leverage, financial distress, and financing cost. The WCR is measured by net trade cycle of a firm.
Ruqia Shaikh; Pervaiz Ahmed Memon; Muhammad Shaique Khan; Muhammad Usman. Do Firms Approach the Target Working Capital Requirement? A Case of Pakistan. Journal on Innovation and Sustainability RISUS 2019, 10, 25 -38.
AMA StyleRuqia Shaikh, Pervaiz Ahmed Memon, Muhammad Shaique Khan, Muhammad Usman. Do Firms Approach the Target Working Capital Requirement? A Case of Pakistan. Journal on Innovation and Sustainability RISUS. 2019; 10 (2):25-38.
Chicago/Turabian StyleRuqia Shaikh; Pervaiz Ahmed Memon; Muhammad Shaique Khan; Muhammad Usman. 2019. "Do Firms Approach the Target Working Capital Requirement? A Case of Pakistan." Journal on Innovation and Sustainability RISUS 10, no. 2: 25-38.
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).
Ruqia Shaikh; Guo Fei; Muhammad Shaique; Muhammad Rizwan Nazir. Control-Enhancing Mechanisms and Earnings Management: Empirical Evidence from Pakistan. Journal of Risk and Financial Management 2019, 12, 130 .
AMA StyleRuqia Shaikh, Guo Fei, Muhammad Shaique, Muhammad Rizwan Nazir. Control-Enhancing Mechanisms and Earnings Management: Empirical Evidence from Pakistan. Journal of Risk and Financial Management. 2019; 12 (3):130.
Chicago/Turabian StyleRuqia Shaikh; Guo Fei; Muhammad Shaique; Muhammad Rizwan Nazir. 2019. "Control-Enhancing Mechanisms and Earnings Management: Empirical Evidence from Pakistan." Journal of Risk and Financial Management 12, no. 3: 130.
This unique study examines the interactive role of bank competition and foreign bank entry in explaining the risk-taking of banks over the globe. We used cross-country data for the banking sector from 2000 to 2016. Using the pooled regression model and Two-stage Least Squares model (2SLS with Generalized Method of Moments GMM), we document that foreign bank entry decreases the risk-taking behavior of the banks to a certain level and exhibits an inverted U-shaped relation with financial stability. Furthermore, the joint effect of bank competition and foreign bank entry brings financial fragility because host banks tend to make risky investments due to undue competition induced by foreign bank entry. We support the competition–fragility hypothesis when foreign bank entry goes beyond a certain threshold. Our results also suggest that restrictions on bank activities and capital regulation stringency reduce the level of the risk factor. We also applied various robustness tests, which further confirm our mainstream results. Our findings have policy implications for foreign investors and regulatory authorities.
Sichong Chen; Muhammad Imran Nazir; Shujahat Haider Hashmi; Ruqia Shaikh; Chen. Bank Competition, Foreign Bank Entry, and Risk-Taking Behavior: Cross Country Evidence. Journal of Risk and Financial Management 2019, 12, 106 .
AMA StyleSichong Chen, Muhammad Imran Nazir, Shujahat Haider Hashmi, Ruqia Shaikh, Chen. Bank Competition, Foreign Bank Entry, and Risk-Taking Behavior: Cross Country Evidence. Journal of Risk and Financial Management. 2019; 12 (3):106.
Chicago/Turabian StyleSichong Chen; Muhammad Imran Nazir; Shujahat Haider Hashmi; Ruqia Shaikh; Chen. 2019. "Bank Competition, Foreign Bank Entry, and Risk-Taking Behavior: Cross Country Evidence." Journal of Risk and Financial Management 12, no. 3: 106.
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.
Muhammad Shaique; Fei Guo; Ruqia Shaikh; Shahbaz Khan; Muhammad Usman. Role of Social Relations of Outside Directors with CEO in Earnings Management. International Journal of Financial Studies 2017, 5, 34 .
AMA StyleMuhammad Shaique, Fei Guo, Ruqia Shaikh, Shahbaz Khan, Muhammad Usman. Role of Social Relations of Outside Directors with CEO in Earnings Management. International Journal of Financial Studies. 2017; 5 (4):34.
Chicago/Turabian StyleMuhammad Shaique; Fei Guo; Ruqia Shaikh; Shahbaz Khan; Muhammad Usman. 2017. "Role of Social Relations of Outside Directors with CEO in Earnings Management." International Journal of Financial Studies 5, no. 4: 34.