PhD
Permanent URI for this collectionhttps://repository.cuilahore.edu.pk/handle/123456789/47
This collection archives the complete set of theses produced by students of the COMSATS University Islamabad, Lahore Campus.
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Item The Relationship Between Corporate Governance and Firm Value: Role of Discretionary Earnings Management(Library Information Services, COMSATS University Islamabad, Lahore Campus, 2018) Sajid Nazir; FA10-PMS-001; Dr. Talat Afza; LHR TP 5287Corporate governance practices help in enhancing firm value by effectively monitoring the managerial decisions as well as reducing the level of information asymmetry and agency problem between empowered managers and dispersed minority shareholders. The present study investigates the relationship between corporate governance and firm value for the developing economy of Pakistan. The study has also taken into consideration the moderating role of discretionary earnings management in corporate governance-firm value relationship, which is considered to be a relatively ignored research issue in corporate finance literature. In addition to focusing on individual mechanisms of corporate governance (i.e. audit, board, compensation, ownership), the present study has also constructed a composite corporate governance index to investigate the role of effective corporate governance in mitigating earnings management and enhancing firm value. The data of 208 firms listed at Karachi Stock Exchange for a time period of 2004 2011 has been used for analysis and accounting, market and economic measures of performance have been used as firm value. The study finds that corporate governance plays a vital role in enhancing firm value in long as well as short run. Constitution of internal audit committees as an effective internal audit system is essential for the enriched progress of a firm. The monetary incentives and compensation paid to the top executives motivates them to work in the best interests of the company which increases not only short term accounting value of firm but also long term market and economic value. The findings reveal that discretionary earnings management practices by corporate managers damage the firm value in long term and it could be mitigated by effective corporate governance mechanisms. Moreover, this value damaging role of discretionary earnings management negatively moderates between effective corporate governance and firm value. Firms with earnings manipulation weakens the impact of effectiveness of governance system and leads to lower firm value. Finally, the study suggests some practical implications based upon the findings for investors, policy makers and manager.Item Corporate Governance, Financial Constraints and Dividend Policy: Evidence from Pakistan(Library Information Services, COMSATS University Islamabad, Lahore Campus, 2018) Muhammad Azeem; FA11-PMS-002; Dr. Talat Afza; LHR TP 5327Information asymmetry between insiders and outsiders creates various issues for a firm, such as the agency problem where managers pursue their own interests even at the cost of the wellbeing of the firm’s shareholders and probable external financial constraints where external investors discount risk by causing a surge in the cost of financing. Normally, a firm manages the issues of the agency problem and external financing constraints by omitting or initiating dividend payments. In most existing studies, scholars have focused on the direct relationship between corporate governance and dividend policies and, thus far, they have produced inconclusive and contradictory results. Most probably, these studies have not considered the role of financial constraints in dividend payment decisions. Moreover, the substantial emergence of corporate scams, along with weak regulatory environments coupled with the underdevelopment of the financial sector of Pakistan, has encouraged the study of the aforesaid tradeoff. Therefore, this study investigated the impact of corporate governance on dividend policies in the presence of financial constraints using a sample of 139 non-financial firms listed in the KSE in Pakistan, where a weak regulatory framework generates agency problems and the underdevelopment of financial sector causes financing constraints for businesses. The results reveal that, in Pakistan, dividends are an Outcome of governance practices. As the quality of firm-level governance improves, shareholders are provided with the legal strength to ultimately force firm managersto pay dividends.Along with the agency problem, the availability of external financing is an important factor related to dividend payment decisions in Pakistan. When a company is confronted with the agency problem and financial constraints simultaneously, managers try to avoid costly external financing rather than reducing agency problem. The corporate regulatory machinery of Pakistan completely inherits the characteristics of low efficiency, and as a result, the issue of unsymmetrical firm-level governance practices has emerged. Eventually, the influence of financial constraints on dividend policies also varies across different corporate governance regimes.Item The Relationship Between Corporate Governance and Firm Value: Role of Discretionary Earnings Management(Library Information Services COMSATS University Islamaabad Lahore Campus, 2015) Sajid Nazir; FA10-PMS-001; Dr. Talat Afza; LHR TP 5287Corporate governance practices help in enhancing firm value by effectively monitoring the managerial decisions as well as reducing the level of information asymmetry and agency problem between empowered managers and dispersed minority shareholders. The present study investigates the relationship between corporate governance and firm value for the developing economy of Pakistan. The study has also taken into consideration the moderating role of discretionary earnings management in corporate governance-firm value relationship, which is considered to be a relatively ignored research issue in corporate finance literature. In addition to focusing on individual mechanisms of corporate governance (i.e. audit, board, compensation, ownership), the present study has also constructed a composite corporate governance index to investigate the role of effective corporate governance in mitigating earnings management and enhancing firm value. The data of 208 firms listed at Karachi Stock Exchange for a time period of 2004 2011 has been used for analysis and accounting, market and economic measures of performance have been used as firm value. The study finds that corporate governance plays a vital role in enhancing firm value in long as well as short run. Constitution of internal audit committees as an effective internal audit system is essential for the enriched progress of a firm. The monetary incentives and compensation paid to the top executives motivates them to work in the best interests of the company which increases not only short term accounting value of firm but also long term market and economic value. The findings reveal that discretionary earnings management practices by corporate managers damage the firm value in long term and it could be mitigated by effective corporate governance mechanisms. Moreover, this value damaging role of discretionary earnings management negatively moderates between effective corporate governance and firm value. Firms with earnings manipulation weakens the impact of effectiveness of governance system and leads to lower firm value. Finally, the study suggests some practical implications based upon the findings for investors, policy makers and manager.