An Empirical Study on Textile Sector of Pakistan completed by MAJU Students.
KARACHI -- The textile sector of Pakistan has been advised to make sure the compliance with Corporate Governance requirements in order to increase the share value which may eventually leads to the growth of textile mills and ultimately benefit to the national economy. This has been recommended in a study report conducted by the graduate students of Business Administration Faculty, Mohammad Ali Jinnah University, Karachi. The topic of this report was 'Corporate Governance and its effect on the Share value of listed Companies-An Empirical Study on Textile Sector of Pakistan'.
The MBA graduate students who conducted this study were Farhan Badar, Mohammad Yasir Siddiqui, Shaikh Mohammad Azhar and Mohammad Waqar Khan. Assistant Professor, Finance Department, Syed Ghazanfer Inam was the supervisor of this study report. The purpose to conduct this study was to check whether corporate governance variables (i.e. Board Size, Board Independence, Board Activism, Audit Committee and Director's Remuneration) and structure of textile companies in Pakistan has impact on the shareholders value. The response of the subject in question can lead to positive impact and negative impact also, based on the structures of the organization being implemented.
It depends on how effectively corporate governance is implemented means if directors are honestly remunerated to make them sincere with their work, then they will be active and independent in making their fair decisions in favor of the organizations, further their decisions and its impacts can be evaluated and reviewed by the group of people (auditors) either external or internal. All these selected steps make the investors (shareholders) satisfy that their selected people are working right in the direction of organization and aligned with organizational goals which in turns create a signal into the market for that particular organization as a potential candidate to be invested, finally leads to increase in demand and its share value. As the interest of every shareholder is to achieve the maximum return against the investment. In case of Textile sector, majority of companies are family owned businesses, so (in general as a sector) board is not fairly active as it should be even the directors are remunerated quite well and evaluations are being done on a regular basis, which could have been improved. The extent of this study was restricted to the Textile sector of Pakistan; twenty textile companies were chosen for study out of the aggregate number of organizations listed on Pakistan Stock Exchange as on 30th April, 2017.
To complete on the outcomes and impact of corporate governance on earning per share, adjustment on conversion into long run is quite good 0.63 (or 63 %) whereas the negative sign tells about convergence of the relationship between corporate governance and share price. On conclusion of the study the researchers have shown the significant effect of Corporate Governance on the share value of the textile firms listed on Pakistan Stock Exchange and recommended that all the companies should make sure their compliance with Corporate Governance requirements so that share value of their firm can be increased which will eventually leads to the growth of textile sector and ultimately benefit to the economy of the country.
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|Publication:||Regional Times (Karachi, Pakistan)|
|Date:||Nov 22, 2017|
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