The Impact of Corporate Governance, Fundamental and Macroeconomic Factors on Stock Prices: An Evidence from Sugar and Allied Industry of Pakistan

Abstract

The aim of this study is to investigate how the corporate governance structure in developing countries’ affects the stock prices of firms. In order to test this relation, the hypothesis related to these variables is developed. Data of all PSE listed sugar and allied industries from 2006-2015 is used to test the hypotheses. The empirical analysis of this study revealed that a positive relationship existed between CEO duality and stock prices. Also, the study showed that the Ownership concentration (OCN) has no significant relationship with the stock price, in which the Ownership concentration involved major shareholders who possessed 5% or more of the total shareholdings in the firm. The relationship between the price of oil and stock price is also investigated, for which the results revealed a significant and negative association. The results of this study also highlighted that there is a negative relationship existed between GDP and stock price. The results of the study also showed that profitability has no significant relationship with stock prices. This implies that an increase in the firms’ profitability has no effect on stock prices of sugar industries. Another important result of our study is that there is a negative connection between inflation and stock prices.