Search Results (24)

This study investigates the moderating role of independent directors on corporate boards in raising the ESG reporting for non-financial listed firms in Pakistan to strive for a greener revolution around the economy. A sample of 369 firms listed and operated on the Pakistan Stock Exchange (PSX) for a period covering 2012–2023 (both inclusive) have been taken out of a target population of 456 non-financial listed firms. The results are investigated using bivariate, multiple, and hierarchical regression analyses. This study has significant findings in the context of Pakistan and can be generalized to struggling economies around the globe. The interventional role of independent directors has significant findings for the full model. Findings from the Corporate Social Responsibility Strategy Score (CSRSS) are inconclusive irrespective of the measurement method used, i.e., environmental innovation score (EIS) or environmental pillar score (EPS). Environmental, Social, Governance Score (ESGS) has revealed a positive and significant impact when EIS is used as a performance variable, whereas when EPS is taken as a performance measure, the results are significant and negative. Under the lens of stakeholders’ theory, upper echelon theory, and agency theory, this study contributes to the corporate governance domain and the literature on environmental improvisation and ESG reporting. Researchers, statutory authorities, and academicians can benefit from it. The vital role of independent directors is the key to developing economies to strive for a sustained greener environment. This study is the first in the Asian and, specifically, Pakistani context to take on the interventional role of independent directors in promoting ESG reporting requirements for corporate greener revolution efforts. Full article

The rapid advancement of digital technology has transformed how investors gather financial information, with platforms like Google Trends providing valuable insights into investor behavior through the Google Search Volume Index (GSVI). While the relationship between the GSVI and market behavior has been explored in developed markets, its application in emerging markets like Pakistan remains underexplored. This study investigates how investor attention, measured by the GSVI, influences market volatility, liquidity, and stock price movements in the Pakistan Stock Exchange (PSX), using weekly data from the KSE-100 Index between 2019 and 2024. The findings reveal that the GSVI significantly impacts market volatility and liquidity, particularly in retail-driven markets with high information asymmetry. Additionally, this research shows that the GSVI is a reliable predictor for stock price fluctuations, with heightened investor attention correlating with increased market activity. Despite the limitations of the GSVI in fully capturing investor sentiment, this study contributes to behavioral finance literature by demonstrating the role of digital information flows in shaping market behavior in emerging markets. It offers actionable insights for investors, financial institutions, and policymakers in Pakistan while suggesting areas for future research in applying the GSVI to global contexts and exploring alternative proxies for investor sentiment in emerging economies. Full article

Using a hand-collected sample of non-financial firms listed on the Pakistan Stock Exchange (PSX) over the period of 2011–2021, we examine the joint effect of intellectual capital and innovation on the financial vulnerability of a firm, which is an important risk factor that a firm may face in its operation. We first use the static fixed-effect panel model as our baseline regression model and find that the level of intellectual capital of a firm strengthens the positive effect of the adoption of product and market innovation on reducing the financial vulnerability of the firm. We also conduct additional analyses using alternative measures of financial vulnerability, as well as various regression models, and confirm that the results are robust under different scenarios. Overall, the results highlight the positive role of the intellectual capital, as well as the joint effect of intellectual capital and innovation, in mitigating the financial vulnerability faced by a firm and thus have academic and practical implications to academic researchers and practitioners. Full article

Earlier research has shown that the makeup of the corporate board is a crucial predictor in meeting stakeholder accountability expectations through voluntary Corporate Social Responsibility (CSR) disclosure. Though scholars have identified substantial relationships between board composition and CSR disclosure, the majority of their focus has been on the ‘quantity’ of CSR disclosure rather than the ‘quality’. Therefore, the present study considers the association of board characteristics (such as gender diversity, independence, female chairperson or/and female CEO, and board size) and the quality of CSR disclosure of the top 100 Pakistan Stock Exchange (PSX)-listed companies. We conducted content analysis of secondary Corporate Governance (CG) and CSR data extracted from the annual reports of PSX-listed companies across ten industrial sectors from the period 2017 to 2018. Our empirical investigation through univariate and multiple regression analysis with ordinary least squares (OLS) techniques revealed that all the board characteristics potentially had a significant association to lower CSR disclosure quality. Using the 2SLS regression model, we addressed the endogeneity issue of board characteristics and found robust results. One of the important implications of our findings is that policymakers and regulators in developing countries like Pakistan should review the value of board qualities as outlined in CG principles and develop stronger mechanisms to improve numbers of female directors and nonexecutive directors’ independence. We acknowledge several research limitations, including the study time period and selected board characteristics. While our study has provided some understanding of the association of board characteristics with CSR disclosure quality of PSX-listed companies, several research gaps still need to be addressed. Future investigators should examine this association through the pre-COVID-19 and post-COVID-19 contexts and the inclusion of a systems theory perspective. Full article

This study examines the impact of the flight-to-liquidity (FTL) phenomenon on the excess stock return by applying the previously developed generalised method of moments (GMM) framework. For this purpose, we use the data covering the period from 2004 to 2018 for 122 public companies listed on the Pakistan Stock Exchange (PSX). This study uses six proxies to measure the expected and unexpected illiquidity. The empirical investigation reveals that expected and unexpected illiquidities greatly influence smaller firms more notably than larger ones, which induces FTL phenomena into the market. Moreover, a FTL phenomenon triggered the Pakistani equity market during the financial crisis, when a significant decline appeared and the less liquid stocks were strongly affected. The results reveal that FTL risk is priced in the Pakistan equity market, making large stocks relatively more attractive in times of dire liquidity. These findings further suggest that the market participants in the Pakistan equity market, including policymakers, regulators and investors, should not ignore FTL phenomena while designing their portfolios. Full article

In this research, benzoxazine (BA-a) and diamino polysiloxane (PSX750) blends were prepared at 0–50 wt% of BA-a. The interactions between two polymeric components were investigated via a Fourier Transform Infrared Spectrometer (FT-IR). The thermal properties of the blends were also determined with Dynamic Mechanical Analyzer (DMA) and Thermogravimetric Analyzer (TGA). The mechanical properties and shape memory behaviors of the blends were also investigated. The FTIR spectra exhibited the shift of the peak from 1672 to the range of 1634–1637 cm⁻¹, which could be identified as hydrogen bonds between two polymeric domains at the contents from 30 to 50 wt%. The DMA thermograms revealed two glass transition temperatures, which could indicate a partially miscible system. The char yield values were increased, while the decomposition temperatures were decreased with an increasing benzoxazine content. Interestingly, the blends at the contents of 10 and 20 wt% presented dual-shape memory behaviors, whereas triple- or multiple-shape memory behaviors were observed with benzoxazine contents of 30 to 50 wt%. For the high-temperature recovery state, a shape memory ratio of 97.5% with a recovery time of 65 s and a shape fixity ratio of 66.7% was recorded at the content of 50 wt%. For the low-temperature recovery state, a shape recovery ratio of 98.9% was observed at the same content. Moreover, the values of the recovery ratio for four shape-recovery cycles revealed multiple shape memory behaviors with high recovery ratios in the range of 95–98%. Full article

In Modern era, the Researchers are keenly interested in different areas of green financing projects such as green economics, green trade, green sustainable development activities, green climatic and environment quests, green investment and financial ventures, and green public policy-related topics, respectively. Owing to the lower cost of production for sustainable development, a healthy climate, and a neat environment is needed, this study is structured to build the significant relationship between various green sustainable development projects, the financial effectiveness and performance of PSX and NYSX, respectively. For this purpose, the time series data for 2000–2020 are collected from IFS, WBI, SBP, the Federal Reserve system, S&DP, and the UNDP financial reports. The empirical analysis reveals the insignificant effects of green investment, financial projects, public policies, and social green projects on the financial performance of PSX, whereas the empirical modeling also attests that all the green factors significantly affect the performance of NYSX except the green economic and trading projects and renewable energy green projects, which are insignificant predictors with respect to FIP-NYSX. Moreover, the index for human development insignificantly affects the prediction of FIP-NYSX. The mixed empirical results guide policymakers, the board of PSX and NYSX, and the management of green financing companies to reconsider their policies and objectives with respect to successful green operations and the financial performance of PSX and NYSX. Full article

The perception in pair trading is to recognize that when two stocks move together, their prices will converge to a mean value in the future. However, finding the mean-reverted point at which the value of the pair will converge as well as the optimal boundaries of the trade is not easy, as uncertainty and model misspecifications may lead to losses. To cater to these problems, this study employed a novel entropic approach that utilizes entropy as a penalty function for the misspecification of the model. The use of entropy as a measure of risk in pair trading is a nascent idea, and this study utilized daily data for 64 companies listed on the PSX for the years 2017, 2018, and 2019 to compute their returns based on the entropic approach. The returns to these stocks were then evaluated and compared with the buy and hold strategy. The results show positive and significant returns from pair trading using an entropic approach. The entropic approach seems to have an edge to buy and hold, distance-based, and machine learning approaches in the context of the Pakistani market. Full article

In developing nations, environmental policies have not given nearly enough consideration to the role that environmentally friendly innovation plays. Green innovation and long-term financial performance are extremely dependent on one another. Despite the fact that numerous studies have investigated the impact that a variety of corporate social responsibility (CSR) activities have had on environmental sustainability, relatively few have investigated the implications of green innovation strategies and sustainability. From the mid-2021 through to mid-2022, information was gathered from 184 businesses listed on the Pakistan Stock Exchange (PSX) across 12 different industries. Estimates of the results were obtained by the use of structural equation modeling using partial least squares (PLS-SEM). The outcomes of the study indicated that all parts of CSR were positively significant in the process of fostering environmentally sustainable growth, with the exception of one aspect of CSR that was directed toward customers. Additionally, sustainable development contributes to the mediation impact that green innovation has, making this effect even more powerful. The data show that CSR activities have an exceptional impact on financial performance (FP) in all aspects other than one, and that green innovation (GI) also has a high-quality impact on FP, which demonstrates the significance of CSR practices in enhancing sustainable environment. Full article

Working capital management requires careful attention from corporate managers because it plays an important role in corporate stability. The social belongingness of managers induced them to learn from their society, colleagues, and overall industrial movement. They also learn from their peers that have more strategic efficiency. In line with these arguments, the objective of the current study is to explore the peer influence on corporate working capital management practices. For regression analysis, we utilized ten years of data (2009–2018) of non-financial publicly listed firms at PSX (Pakistan Stock Exchange). We used the cash conversion cycle (CCC) as a proxy variable to measure working capital management (WCM). We employed panel fixed effect and system GMM (generalized method of moments) models to estimate regression between the variables of the study. The empirical findings suggest the significant impact of peer WCM on corporate WCM. They also suggest the significant impact of other variables that determine the WCM. This study recommends social learning policy for corporate managers. They can learn from their peers to manage the working capital. Most previous studies discuss peer influence on investment decisions, corporate cash holding, financing policy, etc., but no study explores such a relationship specifically in the case of Pakistan. Full article

Periods of economic turmoil distort the ability of stock prices to reflect the available information. In the last three decades, emerging markets experienced numerous crises. The major three of them are the Asian Financial Crisis (1997–1998), Global Financial Crisis (2007–2009) and Global Pandemic Crisis (2020–2022). The nature, intensity and duration of these crises differ significantly. This study investigates the impact of these varying natures of crises on the level of informational efficiency. The empirical evidence is based on the emerging stock market of Pakistan. Index-level data are collected from Pakistan Stock Exchange-100 Index for the period 1995–2022. The rebalancing is done each year to ensure that the final sample is composed of only 100 stocks with the highest market capitalization. The results based on the Variance Ratio (VR) test show that informational efficiency is time-varying. Among all the three crises, informational efficiency deters more in the COVID-19 pandemic, albeit the market efficiency recovers soon. This implies that the arbitrage opportunity is marginal in crisis periods, while investors prefer to invest in post-crisis periods. Finally, our results reveal that among all the crises, investors were more informed in the Global Financial Crisis. Investors must keep a close eye on market regimes for designing investment solutions. Full article

This study empirically examines the spillovers from global uncertainties to the sectoral indices of the Pakistan stock market (PSX). Furthermore, we select three major sectoral indices, i.e., the energy, financial, and material composite indices. These indices represent a massive capital volume of PSX. We utilize the data from 10 May 2002 to 27 June 2022 to examine the outbreak due to the global financial crisis (GFC) of 2007–2008 and the impact of the world’s great pandemic, of COVID-19. Additionally, we applied a novel econometric estimation approach: quantile connectedness. We found that connectedness is strong in the case of highly positive changes (above the 20% quantile) and highly negative changes (below the 80% quantile). Additionally, the study also found that materials sector is the least connected at level of 1.58%. In contrast, the financial sector was a strong transmitter of spillovers during the entire study period at connectedness of 54.59%. Regarding graphical results, we found that economic policy uncertainty (EPU) and crude oil index (WTI) are net transmitters, especially during the financial crisis and COVID-19, whereas WTI transmitting impact was significantly dominant during GFC 2007–2008. Conversely, the index MSCI remains the recipient of the spillover during the entire study period, where the remitting effect was observed as dominant during the GFC, and COVID-19 outbreak. The energy sector was found to be more recipient during the GFC, with additional turn transmitters of the shocks after the COVID-19 pandemic. The study recommends that portfolio managers and individual investors consider the materials sector for their investment due to the least connectivity. Similarly, investors need to invest carefully in the financial sector because it is a net transmitter of spillovers to other sectors. Full article

This study aims to evaluate the mediating role of sustainability in the relationship between environmental-accounting (EA) disclosures and audit quality (AQ) and firm performance (FP) by using GDP and firm size as the controlled variables. Data were collected from the annual and sustainability reports of 80 manufacturing firms that were listed on the PSX during the last 10 years (2011–2020). STATA 13 software and a multiple-regression model were used. The findings that were deduced from the empirical results indicate that EA with sustainability has a significant negative effect on both proxies of the FP (ROA and ROE). By contrast, AQ with sustainability has an insignificant negative impact on firm performance. This research contributes to the scarce literature and compares the level of EA with sustainability reporting and its impact on the FP with the controlled variables GDP and firm size. This study also contributes to the execution of the reporting and the assurance of sustainability, and it helps regulatory bodies with the integral development of reporting and the assurance of EA. Full article

This paper employs a structural empirical model to gauge the possible effects of COVID-19, political and financial events on the returns and volatility of commercial banks. It observes that insured and run-prone uninsured depositors choose between differentiated commercial banks, which appears to be significantly impacted from the present pandemic, especially for the case of Pakistan’s commercial banking sector. The estimated volatility series for commercial banks is measured through the GARCH model, which explains the current financial and political distress for the case of shocks from COVID-19. We calibrate by Impulse Indicator Saturation (IIS) to detect the structural breaks formed by these events in the returns and volatility series of commercial banks. It is observed that the calibrated model possesses almost all financial events that have had a prominent impact on the returns and volatility series whereas two out of eighteen political events are unimpacted. Full article

This paper attempts to detect the unavoidable impacts of COVID-19 on geopolitical and financial events related to Islamic banking and the finance sector in Pakistan. It considers only those major events that triggered imbalances in the equity prices of selected Islamic banks. Employed here is the GARCH model, used to predict the volatility series using daily data from January 2007 to July 2020. The Impulse Indicator Saturation (IIS) helps to identify the structural breaks due to COVID-19, as well as the effects of political and financial events on the returns and volatility series of Islamic banks. The results indicate that all the events due to COVID-19 are significant. While 19 out of 21 political and financial events impacted the returns and volatility series, there were only 2 political events out of 18 that showed no significant effect on the returns and the volatility series. The state’s and Islamic banks’ policymakers can use these results to build an effective and sustainable financial policy regarding Islamic finance and the banking sector. Full article