Exploring the Association Between Investment Efficiency and Firm Value with the Moderating Role of Institutional Ownership; A Case from Manufacturing Firms Of Pakistan

Abstract

This study examines how investment efficiency affects firm value for companies listed on the Pakistan Stock Exchange (PSE), taking institutional ownership into account as a moderating factor. We looked at data from 63 manufacturing firms between 2013 and 2022. A popular market-based metric for assessing firm value, Tobin's Q offers a useful comparison tool. The findings indicate a relationship between investment efficiency and firm value. Additionally, this effect is moderated by institutional ownership. The influence of institutional ownership as a moderator and the effect of investment efficiency on company value are not studied in the context of emerging economy like Pakistan. This gap opens up the possibility of conducting in-depth studies on those variables. Due to the lack of research on the effect of investment efficiency on firm value that highlights the role of institutions, the study's findings might demonstrate the significance and necessity of this investigation and fill the gap in this sector.