Research Proposal on Corporate Finance

Title:

“The Key aim of corporate finance and corporate

financial decisions”

Prepared By:
Muhammad Ammar Tariq
Bachelors in Business Administration
UVAS Business School
Introduction:
We are going to discuss the corporate financial decisions & ownership structure. And later on
their impact on organizational performance. Corporate financial decision includes all financial
decisions that a corporation has to make most of the time regarding
1. Investment
2. Loan Advancement
3. Capital Structure
The ownership structure is defined by the distribution of equity with regard to votes and capital
but also by the identity of the equity owners. These structures are of major Importance in
corporate governance because they determine the incentives of managers and thereby the
economic efficiency of the corporations they manage.

Problem Statement:
The problem statement of our research study is “what & how corporate financial decision &
ownership structure influence the overall performance of the organization“.

Objective of Study;
The main objective of our research study is to check the impact (effect) of corporate financial
decision along with ownership structure on the organizational as well as individual
performance.

Significance of the Study:

The main significance of this research work is that. Many studies shows the impact of corporate
financial decision on performance. The impact of corporate ownership structure on
performance. The impact of corporate social responsibility on performance. But they see their
impact separately. I want to see the collective impact of corporate financial decision &
ownership structure on the performance of organization.

Research Questions:
As we all know research questions are developed on the basis elements based on Dimensions
of basic concept.
1. Some of the possible research questions are.
2. How much return your assets earn per year?
3. What is the percentage of return as compared to equity?
4. What is the ratio of debt against the assets?
5. Is the firm having sufficient current assets to pay off its current liabilities?
6. Is there any improvement in assets as compared to last year?
7. What is the percentage of cost in relation to sales?
8. What is its market position of company compared to industry?
9. Is the cash flow position (liquidity) is satisfactory?
10. Is there any unlimited liability of directors as per article of association or law?

Delimitations:
In this study we include those financial decisions that are related to financial statements only,
other than financial statements are not included in this study. We are conducting research on
dairy industry as sample & in sample we take two companies:
1. Nestle
2. Fan Milk

Literature Review:
According to my area of research I study some literature; in that literature I see that different
peoples see organizational performance through different point ofview. Mohammad Al Mutair,
Associate Professor Helen Hasan University of Wollongong (A Panel Data Approach from Kuwait
Stock Exchange) they both conduct research on the effect of financing decision on
performance. It means that through whatever means company generate finance it will affect
how it successfully operates. Lawrence D. Brown. J. Mack Robinson Distinguished Professor of
Accountancy Marcus L. Caylor PhD. Candidate (December 7, 2004 Georgia State University
Georgia State University) they take one step ahead to performance they see impact of
performance, valuation, shareholder payout on the governance score of the firm. Karen hopper
Wruck (APRIL 1997, Course module overview note.) he also work for organizational
performance keeping in focus the two things ownership & governance & control system. He
means to say that how the different forms of ownership create influence on performance, same
is the case with governance practices effects performance.
Renée B. Adams Heitor Almeida Daniel Ferreira (September 10, 2003 Stockholm School of
Economics New York University SITE and F GV) they work on top management decision making
in relation with organizational performance, means they take CEO’s decision making power as
independent & see relation with organizational performance. Ronghui Zhang (An International
Review and Outlook Logos Verlag Berlin, 2006) they see relation as well as impact of ownership
structure on governance practices. Ownership structure means that which kind of owner it has
whether limited or unlimited, partnership or company etc. Keith D. Brouthers r'Maarten
Geldermaanatrick Arens (Stakeholder and Strategic Contingency Perspectives) they study the
effect of organization structure & management style on performance of the organization. Babar
Zaheer Butt, Ahmed Imran Hunjra and Kashif-Ur-Rehman (World Applied Sciences Journal 9 (9):
997-1002, 2010 ISSN 1818-4952 Foundation University Rawalpindi Pakistan, Iqra University
Islamabad Campus Pakistan) as name implies all of these are Pakistani’s doctors & researchers
they all see different financial decision like capital structure decision, dividend policy,
investment appraisal techniques & working capital management on financial performance.
So after a short literature review I came to know that various author see organizational
performance differently with different perspective.
I am going to establish not new but a change idea of viewing organizational performance with a
view of corporate financial decision & ownership structure collectively.

Theoretical Framework:
Here we take three variables, out of which two are independent and one is dependent:
Independent: corporate financial decision & ownership structure
Dependent: organizational performance.
We are going to see the impact of corporate financial decision & ownership structure on
organizational performance. In financing decision we see whether investment decision have
positive or negative impact on financial & non-financial performance. Same is the case with
financing. Dividend & working capital management. On the other hand we also see in
ownership structure of the firm whether it is limited liability company or unlimited liability
company and its positive or negative impact on the financial & non-financial performance of
the firm. Same is the case with profitable & non-profit organization.
Data collection Method:
1. Financial statements
2. Ratio analysis of both companies
3. Annual disclosure
4. AGM report
5. Audit report
6. Interview of director and senior managers
7. Market performance of both companies

Data Analysis Tool:

1. Ratio analysis
2. Percentage analysis
3. Vertical analysis
4. Trend and industry analysis
References:
Mohammad Al Mutairi , Associate Professor Helen Hasan University of
Wollongong, A Panel Data Approach from Kuwait Stock Exchange.
Lawrence D. Brown J. Mack Robinson Distinguished Professor of Accountancy Marcus L. Caylor
PhD. Candidate, December 7, 2004 Georgia State University, Georgia State University.
KAREN HOPPER WRUCK, APRIL 1997. Course module overview note.
Renée B. Adams. Heitor Almeida. Daniel Ferreira, September 10, 2003) Stockholm School of
Economics New York University SITE and FGV.
Ronghui Zhang, an International Review and outlookMLogos Verlag Berlin, 2006.
Keith D. Brouthersx’Maarten Geldermanx’ Patrick Arens, Stakeholder and Strategic
Contingency Perspectives.