Institutional Ownership, Board Diversity, and Sustainable Growth: Evidence from Pakistan
DOI:
https://doi.org/10.5281/zenodo.10897062Keywords:
Institutional Ownership, Sustainable Growth, Board IndependenceAbstract
Purpose: This study reconnoiters the impact of institutional ownership on the sustainable growth rate (SGR) of companies in the Fuel and Energy Sectors of Pakistan. The study uses active, passive, and foreign institutional investors as independent variables and board diversity as moderators to explain the relation between institutional ownership diversity and SGR. The study also examines the direct influence of board diversity on sustainable growth rate.
Design/Methodology/Approach: Using a sample of 25 companies (250 observations) in the fuel and energy sectors listed on the Pakistan Stock Exchange for the period 2013-2022, we have collected data on institutional ownership diversity, board diversity, and financial performance indicators, including SGR. Generalized Method of Moments (GMM) has been applied to find the results.
Findings: The results indicate that institutional investors have a positive impact on sustainable growth. Specifically, the positive relationship between institutional ownership diversity and SGR is strengthened by greater board independence and CEO duality, while weakened by gender diversity, and CEO experience.
Implications/Originality/Value: Based on the authors’ understanding, this is the primary study that investigates how board diversity moderates the relationship between institutional ownership diversity and SGR in the petroleum and energy sectors of Pakistan. Passive, active, and foreign institutional investors are accounted for.
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