Measuring Stock Market Predictability with Implications of Financial Ratios: An Empirical Investigation of Pakistan Stock Market

This paper investigates the financial ratios prediction on Stock Market Returns for Pakistan Stock Exchange. The research includes three financial ratios; Dividend Yield (DY), Earning Yield Ratio (EYR) and Book-to-Market Ratio (B/M); that have been observed through past researchers as predictors of Stock Market Returns. The theoretical framework is based on Arbitrage Pricing Theory and Capital Asset Pricing Model CAPM by Roll and Ross (1977) and Fama-French 3 factor (1992). Generalized Least Squares (GLS) is applied to estimate the predictive regressions, Cointegration runs are applied to evaluate the long-term relationship, and Generalized Methods of Moments (GMM) to measure the moments over the years and fluctuations in stock returns. The study results show financial ratios as strong predictor of stock return in Pakistan Stock Exchange, the GMM analyses reveal that the EYR has the higher predictive power than DY and B/M respectively. Furthermore, it is found that the financial ratios predictability is enhanced when ratios are combined in the multiple predictive regression models. The research findings are useful for the stock market investors to evaluate their decisions and for academic researchers to evaluate the stock market and investment predictability.

Behavior of Islamic and Conventional Holiday-Effect and Adaptive Market Hypothesis: A Firm Level Evidence from Emerging Market of Asia

This study enhances the existing literature on the Adaptive Market Hypothesis (AMH) and calendar anomalies. The study is a first attempt to link the Islamic and conventional Holidays’ effect with the Adaptive Market Hypothesis that allows the performance of well-known Holiday Effect to fluctuate over time. To fulfil the purpose of the study, the daily returns of 107 individual firms listed in Pakistan Stock Exchange over the period of 20 years (from January 1996 to December 2015) are observed. To explore the varying degree of return predictability of Holiday Effect, the research utilizes four different subsamples comprising an equal length of observations of five years each. It is found that the behavior of the Holiday Effect evolves over time as the performance of this effect varies occasionally and is consistent with AMH. Finally, the paper proposes that the Adaptive Market Hypothesis is a well elucidation of the behavior of the Holiday Effect than traditional Efficient Market Hypothesis (EMH).

Examining the Psychometric Properties and Validating the Multi- Dimension Ethical Leadership Instrument in Banking Sector of Pakistan

This study examines the psychometric properties and validation of the multi-dimensional instrument of ethical leadership encompassing orientation, fairness, power-sharing, ethical guidance, role clarification and integrity dimensions in the banking sector of Pakistan. For the data collection purpose, five hundred questionnaires were distributed to the employees of banks in the province of Sindh, Pakistan based on multi-stage cluster sampling. A total of one hundred ninety-one usable questionnaires were received. The Partial Least Squares (PLS) path modeling was adopted to analyze the data using Smart-PLS 2.0. The findings revealed that all the ethical leadership dimensions considered in the study were highly relevant. The results of the study also demonstrate an adequate level of internal consistency, reliability, convergent validity and discriminant validity for each of the dimensions. This study has confirmed that the ethical leadership instrument could be useful in measuring ethical leadership construct in the service sector. The study findings established that ethical leadership dimensions demonstrate adequate psychometric properties in the banking sector of Sindh, Pakistan.

Competition among BRICS Companies for Cleaner Production Strategies

Cleaner production is a universally defined policy ascertained by of the United Nations for countries worldwide. Multinational companies diligently emphasize the cleaner production strategy while setting their organizational goals. Keeping in view the importance of cleaner production in the world; this study investigates the vision and mission statements of selective multinational companies working in the BRICS countries. Top five multinational companies from each BRICS country; listed in the stock exchanges were taken and their vision and mission statements were analyzed via content analysis methods. The results of the study indicated that the Russian multinational companies were found to be most focused on the cleaner production strategies in their vision and mission statements. Moreover, the results reveal that the South African companies gave the least attention to the cleaner production as compared to other BRICS countries. This study opened the door for future studies and suggested the researchers to investigate more ineptly while focusing more countries and to expand the topic to know the universal implementation of cleaner production policies.

Supplier Selection Criteria in the Context of City Government: Evidence from Renowned Organizations of Karachi City

Supplier selection is one of the most important elements of the procurement process which has the ability to influence the performance of the entire supply chain management. Thus, it is considered as one of the major factors in the supply chain strategy in multinational organizations. Contrarily, least attention is given to the subject by the companies originated in Pakistan. Lack of research in this domain is also impairing this issue. Regardless of the importance of the supplier selection subject, the state-owned companies in Pakistan, are specifically, paying least concern towards it. Thus, the purpose of this study is to identify the importance of different factors of supplier selection, by the state-owned enterprises working under the city government of Karachi. In order to simplify the model, researchers predominantly focused on the generic criteria for supplier selection and further included some other variables like HSSE/ ISO policies and flexible contract terms to the research model. Moreover, moderation has also been used in order to replicate the model effectively with the scenario of Karachi. After adoption of the generic model of supplier selection, Hayes model has been used for the analysis of data. The study findings reveal that the organization working under the City Government of Karachi have different criteria and preferences for supplier selection. Hence the research is pervasive in nature and can be adopted by policy makers and technocrats in order to improve the supplier selection process of state-owned enterprises.

Profitability of the Moving Averages Technical Trading Rules in an Emerging Stock Market: A Study of Stocks Listed in Pakistan Stock Exchange

This study examines the profitability of Moving Averages (MA) timing strategy over the buy and hold strategy for individual stocks listed at Pakistan Stock Exchange (PSX). We applied Han, Yang, and Zhou (2013), methodology to individual stock returns and found inconclusive evidence of MA timing strategy’s predictive ability to earn higher returns over buy and hold strategy. We also report market risk-adjusted returns to remove any market movement effects and apply alternative moving averages lag lengths to check the robustness of our results. We observe individual stock returns are noisier than portfolio returns and the simple technical trading rule of moving average lack the ability to predict individual stock returns. We propose the use of more complex trading rules in future studies to ascertain the profitability of technical trading rules in individual stocks.

Examining Determinants of Entrepreneurial Success: The Case of Small & Medium Entrepreneurs in KP, Pakistan

This study examines the underlying determinants that can lead to entrepreneurial success in relatively troublesome and unfavorable conditions in Khyber Pakhtunkhwa (KP), Pakistan. Identification of these elements can aid policymakers and institutions in promoting entrepreneurial and economic activity. Factors emerged from the literature include government policies, business plans, defensive motivation, availability of capital, and entrepreneurial traits and background. Data were collected from a sample of 190 participants operating small and medium enterprises in the provincial capital, Peshawar through close-ended questionnaires, and analyzed using descriptive statistics and multiple regression analysis. Interestingly, the results revealed that only business plans and government policies significantly impact the entrepreneurial success. These findings highlight the importance of business plans even in the contexts where most businesses are not formally registered. This study can contribute to practice and policy by paving new paths and avenues for those not well bestowed with enterprising personality and thus lacking entrepreneurial characteristics. The study bears both policy and academic implications such that entrepreneurial success can be instigated through governmental policies and assisting in business plans, as opposed to prior research focusing merely on traits, motivation and/or means of capital. This research, therefore, promotes the pool of potential successful entrepreneurs in the region.

High Performance and Abusive Supervision: Comparison Between Organic and Mechanistic Work Structures

Individuals are the intellectual capital of an organization and the driving force of a company. It is their treatment which is of the prime importance that leads to their retention for long time. Thus, management should focus on improving the relationships between managers and their respective subordinates. This research investigates the factors which lead to abusive behavior of managers. One such factor is the high performance of subordinates which posits a threat to their hierarchy, thus managers involve in abuse. Furthering the study, the role of mechanistic and organic work structures has also been measured. This study was carried out in Karachi, Pakistan and a comparison was made between the mechanistic work structure of a government agency and organic structure of a software house. Total of sixty employees and their respective supervisors were taken as sample of the study. It was found that organic structures are more conducive for abuse as compared to mechanistic structures, where managers are socially dominant and exert power over resources. From this study the human resource professionals can gain insight into the effect of work structures on employees’ performance. It is important for organizations to highlight and identify abuse even if it is subtle or done indirectly by the supervisors for the wellbeing of employees and goodwill of companies. The paper corroborates results from previous studies. A novelty in the study is its attempt to use the work structure as a moderator and the findings highlight the likely impact of organic versus mechanistic structures which have not been addressed previously.

Two-Pass Model of CAPM: Evidence from Pakistan Stock Exchange

This research study analyzes the variation in monthly returns of securities for companies listed in Pakistan Stock Exchange-PSX (Formerly known as KSE). The Capital Asset Pricing Model (CAPM) of SLB has provided a method for researchers and experts to forecast the risks and returns. The main purpose of CAPM is to estimate beta of security to explain how much security is aligned or sensitive with the movement or changes in the market return. The research is conducted by means of monthly market capitalization of companies; portfolios are formed and the role of idiosyncratic risk in explaining the variations in the stock returns have been studied. With the same portfolios, the relationship of risk and return relationship has also been analyzed. This empirical analysis is conducted for the period of May 2010 - April 2014. Data analysis reveal that the idiosyncratic risk is a significant factor in explaining the stock returns. Capital Asset Pricing model is rejected in this study context because of positive and significant intercept in all portfolios. The research findings strongly support Chan and Chui (1996) and Strong and Xu (1997), assertions that the relationship between beta and security returns is weak. Therefore, CAPM is an empirically anemic model to be used in the Pakistani market.

What Works in Blog Marketing? Firm Created, or User Generated In 2.0 Web: Evidence from a Developing Country

This study provides insight on how the firm-created communication and consumer-generated communication messages through blog does, influence the perception of consumers and is a source of lifelong learning. This research also assesses the difference in perception of male and female based on their interaction with blogs. This research also investigates whether there is a notable impact of age factor on the consumer perception and how does information available through blog influences their perception formation. An online survey of one hyndred eighty one respondents from Pakistan analyzed statistically. Results suggested that firm created communication material on the blog, user-generated blog communication material, blog credibility, and trending brands on blogs are some of the factors related to blog marketing that influences the consumer perception about the brands. No significant relationship found between blog rating and complete product information availability on consumer perception whereas Blog credibility and trending brands on blogs positively affects the consumer perception about brands.