An Investigation of Economic Consequences of Family Control and Audit Quality of Firms: A Case Study of Pakistan


The paper, empirically investigates the impact of family control and audit quality on firms’ performance, over the period of 2007-2014 for the listed firms at the Pakistan Stock Exchange (PSE), using the Pooled OLS, Fixed effect, and Random effect model. For robustness, the case of reverse causality and cross sectional dependency is taken, using GMM, FGLS and PCSE regression methods. The findings suggest that higher audit quality and the family control are associated with higher firms’ performance and findings as these particular estimates are robust for alternative estimation techniques. Overall, the results support the argument presented by alignment hypothesis of agency theory, stewardship theory, resource based view of firms, and the socio-emotional wealth theory.

Key words: Family Control, Audit quality, Firm Performance.

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