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This study empirically explores the influence of macroeconomic volatilities, such as oil-price volatility, real effective exchange rate volatility and manufacturing output volatility, on stock-price volatility by using annual firm-level unbalanced panel data over the period 1988-2017. The empirical results indicate that the impact of macroeconomic volatilities on stock-price volatility is positive. Firm age and cash holdings significantly positively impact stock-price volatility. In addition, an index is constructed based on the macroeconomic volatilities using principal component analysis. The macroeconomic volatility index also has a positive effect on stock-price volatility. Finally, the results reveal that the impact of macroeconomic volatility on stock price volatility has a positive effect in the pre-and post-2007 Global Financial Crisis period. However, the influence is stronger during the pre-crisis period. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the effects of foreign and domestic institutional investors on the value of excess cash holdings in the context of Pakistan where the institutional setting is broadly considered as non-friendly to outside shareholders due to family control. Design/methodology/approach: A panel sample of 220 listed firms on the Pakistan Stock Exchange (PSX) was employed over the period 2007–2018. Data on institutional ownership are collected from the Standard & Poor's (S&P) Capital IQ Public Ownership database, while the financial data are collected from Compustat Global. The study uses ordinary least squares (OLS) regression with year and firm fixed effects as the main econometric specification. Moreover, the application of models with alternative measures, high-dimensional fixed effects and two-stage least squares (2SLS) regression are also conducted for robustness. Findings: Robust evidence was found that unlike domestic institutional investors, which do not influence the value of excess cash holdings, foreign institutional investors positively affect the contribution of excess cash holdings to firm value. The positive effect on excess cash holdings' value is mainly driven by foreign institutions domiciled in countries with strong governance and high investor protection. Moreover, this effect is stronger in firms that are less likely to have financial constraints. Originality/value: This study provides novel evidence on the effect of institutional investors on the value of excess cash holdings in an emerging market like Pakistan. It also adds to the literature by revealing that the effect of different groups of institutional investors on the value of excess cash holdings is not homogenous. [ABSTRACT FROM AUTHOR]

This study aims to examine the impact of firm characteristics and ownership structure on the firm efficiency of listed non-financial firms in Pakistan from 2012 to 2017. Firm characteristics include market capitalization, cash holdings, book-to-market ratio and negative book-to-market ratio and ownership structure includes insider ownership, institutional ownership and concentration ownership while controlling for firm size, profitability, leverage and age. Data related to firm efficiency, cash holdings, book-to-market ratio and negative book-to-market ratio was collected from Financial Statement Analysis published by SBP whereas data related to market capitalization and ownership structure (insider ownership, institutional ownership and concentration ownership) was collected from business recorder and published annual reports respectively. At first stage the firm efficiency is reported by using DEA CRS approach and results show that the year 2014 was the best year because 24% firms were efficient and 2015 was the worst because only 18% firms were efficient. The results also show that textile, sugar, food, manufacturing, chemical & pharmaceuticals, cement, motor vehicle, information communication & transportation are the poor performing sectors of Pakistan. This inefficiency might be due to the inefficient use of resources as agency theory advocates. Then at second stage, the correlation and variance inflation factor did not show any multicollinearity. Tobit model is used to find the regression results. The regression results show that market capitalization, cash holdings and concentration ownership positively and significantly influence the firm efficiency. Negative book-to-market ratio, insider ownership and institutional ownership negatively and significantly influence the firm efficiency whereas the book-to-market ratio is insignificant with the firm efficiency. It might be due to the self-interest by the insider and institutional ownership. This study is also helpful for the investors. They can choose the efficient firm for investment and to avoid the inefficient firms to stay away from the losses. [ABSTRACT FROM AUTHOR]

This study aims to investigate the direct relationship between precautionary cash holdings, cash flow volatility and the financial constraints of Pakistani firms for the period 2003–2013.The study also takes into account the 2008 financial crisis. This study seeks to discover that if a firm is financially constrained and its cash flows are highly volatile then it will increase its cash holdings and voluntarily reduce its current investment level due to the intertemporal trade-off between current and future investments. Thus, a positive relationship between cash holdings and future cash flow volatility and a negative relationship between current investments and future cash flow volatility is expected. In order to test the impact of cash flow volatility firms are classified in to constrained and unconstrained groups on the basis of four criteria, i.e., firm size, dividend payment, Kaplan-Zingales (KZ) index and group affiliation. For each criterion estimation is done by using two steps Generalised Method of Moments (GMM) estimator. Results show that financially constrained firms increase their cash holdings when cash flow volatility increases while financially unconstrained firms do not, except for KZ index criteria. It is also found that during the 2008 financial crisis constrained firms were more prone to saving cash than unconstrained ones. The study provides important insights into understanding the behaviour of Pakistani firms relating to cash holdings when they are financially constrained and cash flows are highly volatile. This is the first study of its kind that establishes a conclusive relationship between precautionary cash holdings, cash flow volatility and financial constraints in a Pakistani context. [ABSTRACT FROM AUTHOR]

Purpose of this research is to examine the effects of catering incentives and earn contributed capital mix on propensity to pay and decision to change dividend for Pakistani manufacturing concerns. Basic intent is to validate the most recently developed dividends theories with respect to Pakistani sample i.e. catering theory and Life Cycle Theory. This research is conducted on Pakistani non-financial companies duly listed on Karachi stock exchange from 1998 to 2009. Catering theory is measured by dividend premium, life cycle theory is measured by earned contributed capital mix, while the proxy used to measures dividend payment decisions are propensity to pay, and decisions to change dividend. Company's age, Growth prospects, Market to book ratio, profitability, cash holding have positive impact on dividend increasing companies and negative to dividend decreasing. While catering incentives, taxation and leverage has negative impact on dividend paying companies vice versa for Decreasing and dividend omitting companies. Results confirm that catering theory holds in developing economy like Pakistan while life cycle theory provides little evidence. Pakistani stock exchange crises pose little effects on investors mind. [ABSTRACT FROM AUTHOR]

Corporate cash holdings always involve a trade-off between benefits and costs. This study investigates the determinants of corporate cash holdings. Cash flows, leverage, liquidity, cash flows volatility, profitability, growth opportunities, firm size, debt maturity, and dividend represent the independent variables in the research study. It is based on a panel data of 150 Pakistani non-financial listed firms on KSE during the period 2004-2012. Panel regression analysis has been conducted to determine the major factors affecting cash holdings. The results imply that growth opportunity, company size, cash flows, and profitability of the firms exert a positive effect while leverage and liquidity show a significant negative impact on corporate cash holding. The findings indicated that both pecking order theory and trade-off theory play an important role in explaining the determinants of corporate cash holdings. The findings are beneficial for managers, shareholders, investors, regulatory bodies, and researchers for developing appropriate policies. [ABSTRACT FROM AUTHOR]

This study examines the determinants of corporate cash holdings using the data of non-financial firms listed on the Karachi Stock Exchange. Using various firm-specific determinants of cash holdings, we extend our analysis to the firm specific, industry specific and group-affiliation effects in determining the cross-sectional differences in corporate cash holdings. We affirm most of the past theories and contradict only a few. Consistent with the past studies we find that Pakistani firms' cash holdings are highly influenced by a precautionary need. Our results indicate that the cash holdings of Pakistani firms increases with increase in cash flow/ net asset, market to book ratio and volatility of cash flows. We find that net working capital, leverage and capital expenditures are negatively related with corporate cash holdings of the firms. [ABSTRACT FROM AUTHOR]