Impact of Family Ownership on Financial Decisions of a Firm: An Analysis of Pharmaceutical and Chemical Sectors in Pakistan

The current study examines the debt and dividend policies of family business (FB) versus non-family Business (NFB). For the identification of FBs from NFBs, two threshold levels of ownership (25% & 50%) were applied. For this purpose, panel data ranging from the period of 2004 to 2013, a sample of 34 firms from pharmaceutical and chemical sectors, listed at Karachi Stock Exchange (KSE) were used. Among many the generalized method of moments (GMM) was found appropriate as an analytical technique. The result drawn through GMM indicated that there was stronger positive relation between internal fund and dividend payout ratio in FBs than NFBs. Moreover, weaker negative relation was found in FBs as compared to NFBs. However, the speeds toward target dividend ratio were (72.20% & 56.80%) for FBs and NFBs respectively.