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Role of Family Firms to Uplift the Financial Performance and Investment Opportunities of Listed Manufacturing Firms of Pakistan

Muhammad Zulfiqar, Muhammad Kashif Khurshid, Sadeen Ghafoor, Aamer Saleem


This study is conducted to analyse the relationship of Ownership Structure with Firm Performance in non-financial companies listed at Pakistan Stock Exchange during the period 2008 to 2013. The basic focus of this study was related to the performance of family firms as compared to non-family firms. The distinction between both types has been explained in literature with the help of definitions given by different authors and scholars. Keeping in view the research aims and objectives the non-financial sector of Pakistan is taken as population. Simple random sampling technique is used in accordance to research requirements and extracted a sample of 120 firms for the purpose of analysis. All these firms are listed at Pakistan Stock Exchange (PSX). Investment Opportunities (Tobin’s Q), Return on Assets (ROA) and Return on Equity (ROE) have been used as a proxy variable to explore the firm value and firm’s financial performance. Sophisticated data analysis techniques such as descriptive, correlational, panel data regression analysis have been used. Results showed that Family firms are negatively correlated and Non-Family firms give better performance. On the basis of results obtained through data analysis it is concluded that Firm Performance critically depends on Managerial Ownership. Panel data analysis has shown that firm leverage and size has no relationship with proxy variables while remaining independent variables have significant relationship with performance variables. Agency problems arise due to increase in Managerial Shareholdings in Pakistani context, which ultimately affects the performance of the firms.


Family Firms, Non-Family Firms, Family Control; Firm Value; ROA; ROE; Tobin’s Q

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