Impact of Ownership Structure on Cash Holding; A Comparison of Shariah-Compliant and Nonshariah Compliant Firms of Pakistan.

Abstract

The motive of this study is to determine the Impact of ownership structure on cash holding; a comparison of shariah-compliant and non-shariah compliant firms of Pakistan. In this study we have used the secondary sources of data, firms registered in Pakistan stock exchange from 2009 to 2019. The data for main variables were taken from S&P Global, for other variables data was taken from data stream and test was run through SAS software. The study discusses the impact of the Ownership structure on Cash holding, Insider ownership, Institutional ownership, and public ownership. Moreover, some other variables were used as capital expenditure, cash flow, debt issuance, Dividend, Equity issuance, leverage, market book value, networking capital and size. Statical analysis system is used for data analysis furthermore, descriptive statistic, correlation, OLS regression, year fixed effect, industry fixed effect and finally correlation and regression test has been done. The findings of all tests reveals that the relationship between Cash holding, and institutional ownership is negatively correlated but significant in both sharia and non-shariah compliant firms. Cash holding and individual insider in sharia compliant are positively correlated however, in industry fixed effects slightly show negative relationship in sharia compliant and in Non sharia the results show negative relationship between individual insider and Cash holding. Public ownership shows the positive and significant relationship with cash holding; however, the same variable shows negative relationship in non-sharia firms.