Effect of Financial Architecture on Firm Profitability and Corporate Value of Firms Listed In Pakistan Stock Exchange (PSX)

Abstract

The purpose of this study is to test and examine the changes in firm profitability and corporate value due to financial architecture of the firms listed under Pakistan Stock Exchange. The study uses Panel Data Estimation and this technique was applied to 70 companies in Pakistan Stock Exchange (PSX) list, which were selected to estimate the effect of financial architecture on firm profitability and corporate value for the period of 2016-2020. The results show that Financial Architecture which is consist of Ownership Structure and Dividend Policy has a significant positive impact on both the Firm profitability and corporate value. The study reveals that strong the financial architecture more will be beneficial for the firms, as there will be less conflict among the management and the investors which leads to increase in the value for the firm.