IMPACT OF OWNERSHIP STRUCTURE AND BOARD COMPOSITION ON FINANCIAL DISTRESS OF PAKISTAN STOCK EXCHANGE LISTED MANUFACTURING FIRMS

Prediction of financial distress is very important for the long-term survival and growth of the firms. If financial distress is not handled timely without any recovery strategy, it can lead the company to bankruptcy. Since independence, Pakistan has witnessed numerous cases of bankruptcy among non-financial firms. This study sought to investigate the impact of ownership structure and board composition on financial distress of non-financial firms listed in Pakistan Stock Exchange (PSX) for the period 2009-2016. The financial distress is measured using Emerging Markets Z-Score (EMS). In accomplishing the overall objectives, the study sought to establish the effect of board structure, ownership structure on financial distress of non-financial firms. A census of all the 384 non-financial companies listed in PSX as of December 2016 constituted as a target population. Descriptive statistics, correlation analysis, and panel regression techniques were used to analyze the data. The fixed-effects model used based on Hausman test. The results of the study indicate that individual's ownership, CEO's duality, insider's directorship, firms size, and leverage play positive and significant role to enhance the financial distress while; managerial ownership, institutional ownership, board size, and board independence play significant role to reduce the financial distress of PSX listed firms. The study concludes the significance of board and ownership structure to predict financial distress. (C) 2019 INT TRANS J ENG MANAG SCI TECH.