Fiscal Decentralization in Pakistan: A Case Study of Punjab Provincial Finance Commission

The success of federalism in multiethnic societies greatly depends on fiscal decentralization. It empowers the provincial governments along with the local bodies at the grass root level. In this perspective fiscal decentralization needs structural arrangements in order to ensure revenue generation and appropriate expenditures. It helps to strengthen the national grid to avoid inter-provincial or intra-provincial discrepancies. This study illustrates the relationship between fiscal devolution and symmetrical horizontal economic development. It envisages the devolution plan (2001) introduced by former General Pervez Mushraff in Pakistan under which the Provincial Finance Commissions were established. This research would focus on Punjab as a case study to analyze the working of Provincial Finance Commission. This research tends to address the questions like what have been the patterns of fiscal decentralization in Pakistan? Did National Finance Commission and Provincial Finance Commission promote the principles of equitable devolution of resources in the divisible pool on the basis of need assessment? Could PFC be able to mitigate the intra-provincial disparities in Punjab? Did PFC take efficiency advantage in Punjab through the empowerment of local governments? This study would encompass the analysis of the resource allocation formula opted by the successive governments in the past till present and the counter arguments by the academia and the local body members. Qualitative and quantitative both methods would be used while incorporating primary as well secondary sources. This research concludes with the proposition that empowered local bodies and effective finance commission are the sine qua non of fiscal decentralization in democratic state like Pakistan.

Relationship of Value-Added Measures, Accounting Measures and Cash Flow Measures With Shareholders? Wealth: An Empirical Evidence of Psx Listed Non-Financial Firms

Measuring performance is an important part of monitoring the state of affairs and progress of an organization. It comprises of measuring the actual performance of management in an organization against the pre-set goals that were set for the given period. When it comes to performance, it is always a challenge to determine what to measure and of course, how to measure it. Traditionally, organizations use accounting based performance metrics to determine the performance of management in an organization. These accounting based performance metrics are considered vulnerable to mislead the end user. As a result, reliance on these measures has resulted into major corporate failures like Enron, World Com etc. Secondly, stock investors particularly institutions have now been focusing on intrinsic value for their investment decisions. These two changes have put accounting based measures under question and call for other measures that are more reliable. Researchers and practitioners in industry have devised new metrics that include cash flow measures and value added measures. Some researchers consider cash flow measures more effective in determining enterprise effectiveness and competitiveness in the market as it is a more dynamic examination of actual return on assets and equity. Others take value added measures as a yardstick in measuring the performance by reflecting the impact of managerial decisions in stock returns. The primary objective of this study was to find evidence whether accounting measures, cash flow measures or value added measures, as a yard stick to measure managerial performance, are the best suitable to measure performance of corporate firms working in Pakistan. The hypothesis of this study was to check the significance of all these measures in determining stock returns translated into market value added (MVA) and the relationship with MVA. These variables include accounting variables - net profit margin (NPM), return on assets (ROA), earning per share (EPS), cash flow variables ? operating cash flows (OCF), free cash flows (FCF) and value added variables ? economic value added (EVA) refined economic value added REVA), created shareholder value (CSV). This hypothesis was tested on the cross section data of 33 non-financial Pakistani companies listed on the Karachi stock exchanges for a period of 8 years (2007-08 to 2014-15). This study proved that OCF gives better results as compared to other variables in explaining variation in MVA.