Does business group affiliation and managerial entrenchment improve efficiency (Pakistani Context)

1. DOES BUSINESS GROUP AFFILIATION
AND MANAGERIAL ENTRENCHMENT
IMPROVE EFFICIENCY?
A CASE OF PAKISTANI LISTED BANKS
Project Proposal
Presented By : Mudassar
Naeem
Roll Number: i16-1205

2. AGENDA OF TODAY’S
PRESENTATION
Introduction
Literature review
Hypothesis development
Proposed Methodology

3. INTRODUCTION
Brief background
Research Gap
Theoretical justification
Research objectives
Problem statement
Significance of study

4. BRIEF BACKGROUND
Group Affiliation
Managerial Entrenchment

5. RESEARCH GAP
Important point of discussion
Gap to explore new determinants
No significant research (banking sector)

6. THEORETICAL JUSTIFICATION
Agency Theory
Managerial Entrenchment
Group Affiliation

7. OBJECTIVE OF THE STUDY
To analyse the impact of Business Group Affiliation and managerial
ownership on firm efficiency.

8. PROBLEM STATEMENT
There exists a research gap in the literature as no recent research has
been conducted on evaluating the impact of Group affiliation and
managerial entrenchment on efficiency of banking sector in Pakistan.
This research would be one of the first to analyse the impact of these
two variable on efficiency of banks. This is also going to be first time
been studied in the context of Pakistan.

9. SIGNIFICANCE OF THE STUDY
Existing literature does not provide banks specific data.
Pioneer to examine this connection
Helpful for investor
Helpful for the shareholders and directors of the bank

10. LITERATURE REVIEW

11. Author Year Study
Li 2007 Managerial ownership and firm
performance
Guest, P. and D. Sutherland 2009 The impact of group affiliation on
performance: evidence from china
national champions.
Hsieh, Yeh, and Chen 2010 Business group characteristics and
affiliated firm innovation
Moussa, Sonia
RACHDI, Houssem
Ammeri, Aymen
2013 Governance, Managers’ Entrenchment
and Performance:
Komera, Lukose, and Sasidharan 2016 Business Group Affiliation and
Innovation in Medium and High-
Technology Industries

12. HYPOTHESIS DEVELOPMENT
H 10: there exists a relationship between business group affiliation
and efficiency of banks
H 1A: there exists no relationship between business group affiliation
and efficiency of banks
H 20: There exists a relationship between managerial entrenchment
and efficiency of banks
H 2A: There exists no relationship between managerial entrenchment
and efficiency of banks

13. RESEARCH DESIGN AND
METHODOLOGY

14. RESEARCH METHODOLOGY
Estimation model
Data specification
Variable specification
Method

15. ESTIMATION MODEL
Where
GA = Group Affiliation
ME = Managerial entrenchment
BS = Bank Size which is explained by
number of board members
BI = Board Independence
CEOD = CEO duality which explains that
CEO and chairman board is same
ACI = Audit committee independence
LEV = Leverage
SG = sales growth
ROA = Return on Asset
EFF = f (β+ β1 BGA+ β2 ME+ β3 BS + β4 BI + β5 CEOD +
β6 ACI + β7 LEV + β8 SG + β9 ROA + µ)

16. DATA SPECIFICATION
1. Pakistani listed banks
2. Data from annual reports of banks
Will be downloaded from respective banks website and other sources
3. For period of 8 Years (2009-2016)
4. Only selected banks that were listed during that period will be
included

17. VARIABLES SPECIFICATION
Bank Size Number of board members (Salim,et al,2016)
Bank independence Ration of number

18. TIMELINE
Week Description
Week 1 Project brief
Week 4 Project FYP proposal to
supervisor
Week 14 Project FYP proposal
submission to coordinator
Week 17 Final project report
Week 18 Viva/presentation

19. REFERENCES
CARNEY, MICHAEL. 2011. "BUSINESS GROUP AFFILIATION, PERFORMANCE, CONTEXT,AND STRATEGY." Academy of
Management Journal:437-460.
Fama, Eugene F, and Michael C Jensen. 1983. "Separation of ownership and control." The journal of law and Economics 26 (2):301-
325.
Guest, Paul, and Dylan Sutherland. 2009. "The impact of business group affiliation on performance: evidence from China's ‘national
champions’." Cambridge Journal of Economics 34 (4):617-631.
Hsieh, Tsun-Jui, Ryh-Song Yeh, and Yu-Ju Chen. 2010. "Business group characteristics and affiliated firm innovation: The case of
Taiwan." Industrial Marketing Management 39 (4):560-570.
Komera, Surenderrao, PJ Jijo Lukose, and Subash Sasidharan. 2016. "Business Group Affiliation and Innovation in Medium and
High-Technology Industries in India." In Technology, 43-56. Springer.
Li, Donghui, Fariborz Moshirian, and Pascal Nguyen. 2007. "Managerial ownership and firm performance:." Research in
International Business and Finance:396-413.
Moussa, Sonia, Houssem RACHDI, and Aymen Ammeri. 2013. "Governance, Managers’ Entrenchment and Performance: Evidence
in French Firms Listed in SBF 120." International Journal of Business and Social Research 3 (2):35-48.
Nadafi, Mostafa. 2014. "A Study of the Relationship between Internal Auditing and Financial Performance in Tehran Stock Exchange
Companies." Asian Journal of Research in Banking and Finance 4 (1):140.

20. THANK YOU