Performance of Pakistani Business Groups During Energy Crisis

29 Pages Posted: 14 Nov 2016 Last revised: 3 Jan 2017

See all articles by Aamir Bhutta

Aamir Bhutta

Government College University, Faisalabad

Muhammad Tahir Suleman

School of Economics and Finance, Victoria University of Wellington

Date Written: November 14, 2016

Abstract

Considering the market imperfection theory, this study analyses the performance of Pakistani business groups using a data set of 253 firms from 2003-2012. We find that group affiliation plays a significant role in firm performance due to the group’s ability to better cope with inefficiencies and facilitate the member firms’ access to capital. Moreover, business groups become more integrated during industrial downturns. They are better able to absorb the negative shocks that the economy has suffered during the energy crisis, with the help of group level resources. Finally, the performance of Pakistani export-oriented firms is significantly negative during the energy crisis. Also, insignificantly lower performance by export-oriented manufacturing group affiliates during the crisis suggests that they pay more attention to their profitable local industry ventures during the energy crisis. Overall, our findings suggest that business groups perform better when market inefficiencies increase.

Keywords: market imperfection, business groups, performance, energy crisis and Pakistan

JEL Classification: L25, D43, Q43

Suggested Citation

Bhutta, Aamir and Suleman, Muhammad Tahir, Performance of Pakistani Business Groups During Energy Crisis (November 14, 2016). 8th Conference on Financial Markets and Corporate Governance (FMCG) 2017. Available at SSRN: https://ssrn.com/abstract=2868971 or http://dx.doi.org/10.2139/ssrn.2868971

Aamir Bhutta (Contact Author)

Government College University, Faisalabad ( email )

New Campus, near Children Hospital Jhang Road
Faisalabad, Punjab 34500
Pakistan
00923336716051 (Phone)

Muhammad Tahir Suleman

School of Economics and Finance, Victoria University of Wellington ( email )

PO.Box 600
New Zealand

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