Investment-Cash Flow Sensitivity in Family Owned Pakistani Firms

Muzammal Khan, Muhammad Salman Shabbir, Muhammad Sohail Tahir, Rafaqet Ali, Mubeen Hussain

Resumen


Different governance structure of family owned firms may impact their investment decisions and hence performance in the long run. This study investigates the impact of family ownership and control on investment-cash flow sensitivity of family owned firms listed in Pakistan Stock Exchange.  Using the ownership threshold of >50% share holdings, panel data of 135 firms is analyzed from 2004-2017. Generalized Method of Moments (GMM) was used to estimate the coefficients of model. Results reveal the financing decisions are significantly sensitive to the cash flows generated by the firms in a credit constraint environment. The study recommends policy makers to facilitate capital funding to family owned firms and encourage the placement of professional CEOs instead of family members. 


Palabras clave


family firms, investment-cash flow sensitivity, control and CEO

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