Simultaneous Equation Estimation in Finance and Corporate Financial Decision: Empirical Evidence from Pakistan Stock Exchange

• 발행기관: 한국유통과학회
• 저자명: Wahab AHMED Hadi Hassan KHAN Abdul RAUF SM Nabeel ULHAQ Safia BANO Bilal SARWAR Shams ul HUDA Mirwaise KHAN Ahmed WALI Maryam Najeeb DURRANI
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.3, 11~21쪽, 전체 11쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.03.30

영문 초록

In the last few years, there is growing interest in the field of simultaneous equation estimation in finance due to the endogeneity problem caused by measurement errors, simultaneity, or omitted variables. This study aims to discuss the endogeneity problem in corporate financing decisions and investigate the interrelationship of financial decision-making such as investment decision, dividend decision, and external financing decision in Pakistan Stock Exchange (PSX) using two-stage least squares (2SLS) and generalized method of moment (GMM) estimation. The Bruech-Pagan test shows that the data has no heteroskedasticity issue and 2SLS is a better approach in the context of this study as compared to the GMM approach, and internal instruments are also sufficiently strong and valid. The three financial decisionmaking attributes are not jointly determined, and the dividend is influenced by one-sided investment. In the emerging stock market context, external financing and investment are not inter-related and did not affect each other. The question of whether the simultaneous equation estimation can be useful in the context of the emerging stock markets and newly-growing firms remains unanswered. The inclusive evidence shows that the theoretical link in the emerging stock market is difficult to prove like in developed stock markets.

목차

1. Introduction

2. Literature Review

3. Methodology

4. Conclusion

References

키워드

Corporate Financial Decisions Simultaneous Equation 2SLS GMM