Volume 4 Number 6 June 2018

Role of Corporate Governance in Firm “Performance and Ownership Structure”: Evidence from Listed Food Companies in Pakistan

Authors: Tabinda Qureshi ; Waqas Mahmood
Pages: 188-196
This study aims at examining the impact of the ownership structure on the overall performance of listed companies in Pakistan to specify how different ownership structures and corporate governance culture differ from each other and thus explores the effects of different ownership structures and corporate governance on the performance of companies’ productivity. In order to compare Returns on Investment (ROI) and Returns on Equity (ROE) of the five (5) listed food companies in Pakistan were calculated using secondary data from the audited financial reports of such companies based on their annual reports between 2007 and 2016. During this research for the analysis of gathered data, regression model was used with the assistance of EViews in order to examine the relationship between the corporate governance mechanism including board is size, board composition, and audit committee and the performance variables including Net Profit Ratio (NPR) and Rate of Return (RoR). The findings of the our study are consistent with the reviewed literature, as the performance of firms (in terms of return on assent and net profit ratio) does not seem to be dependent on the board size, composition, and audit committee composition of firms.

An Empirical Analysis of the Determinants of Corporate Debt Policy of Nigerian Firms

Authors: B. I. Ehikioya
Pages: 180-187
Corporate debt policy remained a significant, but a challenging decision for managers entrusted with the responsibility to improve the value of the firm. Thus, this study examines the factors influencing the capital structure decisions of firms in Nigeria. The study employs a panel data regression model to analyze data from firms in Nigeria for the period 2011 to 2015. The result of the empirical analysis reveals that firms in Nigeria have a preference to finance economic operations from retained earnings and the use of short-term debt on rollover basis. The finding of this study confirms that debt decreases with profitability and growth opportunities. The findings show that asset tangibility and firm size have a positive and significant relationship with debt policy of firms in Nigeria. The analysis also reveals that managerial ownership has a negative and significant relationship with debt ratio of firms in Nigeria. The study shows a non-significant positive relationship between non-debt tax shields and debt. The study demonstrates that the trade-off and pecking order theories both explains the factors influencing capital structure decisions of firms in Nigeria. Therefore, this study suggests the need for stakeholders to develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.

Capital Accumulation and Labour Productivity Growth in Nigeria

Authors: Ibukunoluwa Awotunde
Pages: 171-179
This study evaluates the role of capital accumulation on labour productivity growth in Nigeria. Endogenous growth and efficiency wage theories are employed in explaining the determinants of labour productivity. The ordinary least squares method of estimation employed to evaluate the effect of capital accumulation on labour productivity and employment generation in Nigeria over the time frame of 1970-2014. The findings of this study include: education expenditure and capital formation’s impact on labour productivity growth is time dependent; health expenditure positively impacts labour productivity growth; compensation to employee negatively impacts productivity growth in Nigeria.

Deconstruction of ROE: An Implementation of DuPont Model on Selected Bangladeshi Commercial Banks

Authors: Md. Zahidur Rahman ; Rubel Mia
Pages: 165-170
This study attempts to measure the financial performance of selected Bangladeshi commercial banks for the period 2010-2016 through using the DuPont model which is an important tool for measuring profitability and judging the financial performance of any financial entity. The modified DuPont model disaggregates ROE (which is an indication of the earning power of the firm) into five components: tax burden, interest burden, profit margin, total asset turnover, and equity multiplier ratios. Empirical results exhibit that Dhaka Bank has performed best in every aspect and secured the first position due to highest average ROE. On the other hand, AB Bank is the least performer among all the banks due to its lowest average ROE.  Finally, this study suggests that a company can have high ROE if it has high operating margin, lower interest, lower income tax, efficient use of assets and high use of debt in its capital structure.

Do Predictive Power of Fibonacci Retracements Help the Investor to Predict Future? A Study of Pakistan Stock Exchange

Authors: Rana Zafarullah Shaker ; Muzaffar Asad ; Nabeeha Zulfiqar
Pages: 159-164
There are number of ways like Technical Analysis, Fundamental Analysis and The Efficient Market Hypothesis that helps to know the behaviour of investor which helps to predict future. In this study author used Fibonacci numbers/series analysis which consider for forecasting future stock prices trends. For the purpose of this study four listed companies are selected at random by convenience sampling from Cement Sector for the period of 1st quarter of 2017. Closing prices of open days of market are taken from Karachi Stocks and graphs are made. This study concluded that in four companies of cement sector, there were total 63 support levels out of which 17 (27%) and total 66 resistance level from which 24 (36%) were followed Fibonacci retracements. So the study findings accept the hypothesis that the trend reversals in Cement sector listed in PSX follow Fibonacci retracements to some extent. Analysis of this study showed that there is at least one strong support and one strong resistance in every company and some small resistant and support levels.