The impact of ownership structure on corporate decisions: Evidence from Pakistani non-financial distressed and non-distressed firms

Abstract

In corporate finance the financial decision making is a crucial area. From policy makers as well as from academics it has received high attention. To check the impact of ownership structure on dividend payout and financing policy of non-financial distressed and nondistressed firms of Pakistan is the main theme of the study. For the purpose of the research total 225 firms of non-financial sectors are taken out of which 185 are distressed and 40 are non-distressed firms that are listed on Pakistan stock exchange. From 2011-2017,6 years data is collected from annual reports of the firms. In research secondary data is used. By using three different tests including correlation analysis, descriptive analysis and panel data regression method the results are revealed. To conduct the results Stata software is used. Authors have their divergent point of views according to some previous researchers. Some authors suggest that ownership structure has positive impact on corporate decisions while the some other authors suggest that ownership structure has its negative impact on corporate decisions. Companies distribute more dividends with higher shareholding by its owners it is assumed. It is also assumed that companies distribute more dividends with higher institutional shareholding to please them. To undergo the study this contradiction encouraged researcher. In financial decisions (dividend payouts and capital structure) whether institutional and managerial shareholding makes a significant difference or not this study inclines towards these findings. The companies with higher institutional ownership invest more capital and tend to pay better dividends according to our study findings. Moreover, firms make better dividend policies with higher profitability.