Abstract:
The research investigates the
influence of the predominant block holder and contestability
on corporate leverage. The study regards book leverage as the
dependent variable. Shareholders possessing 10% or more of
voting rights are classified as independent variables.
Additionally, for the contestability effect, coalitions are
regarded as independent variables due to their positive
correlation with contestability. Six control variables were
considered Size, Age, Tax, Asset Tangibility, ROA, and NDTS.
The study indicated that leverage and the largest
block holder were negatively related. This means that the
biggest block holders will want less debt because they have
more voting power. The results showed a positive link when
the second and third largest owners challenged the largest
block holder. This suggests that when the second and third
largest shareholders are present, the level of debt in a
company goes up.
The sample time frame is from 2016
to 2021. We got data from the Pakistan Stock Exchange website
for 146 companies in the manufacturing industry in Pakistan.
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