Investor protection and external financing: Empirical evidence from non-financial sector of Pakistan

Abstract

This study aims to investigate the impact of investor protection on external financing. In developing economies like Pakistan, companies having foreign ownership have more access towards external finance as compared to companies having domestic ownership. Data extracted from 70 non-financial sector companies for the period 2003–2013, was analyzed by using fixed effect model. The findings showed that investor protection has significant impact on external financing, which means companies having strong investor protection are more inclined towards investor protection. Therefore, we can say that good policies and proper rules and regulation may attract the foreign investors.