A research philosophy is a belief about the way in which data about a phenomenon should be gathered, analyzed and used. It facilitates as a roadmap to conduct the business research.
Research philosophy provides an insight for the motive in order to conduct the research. It also includes data collection process and interpretation processes. Research philosophy is of two types – positivism and phenomenology.
Positivists believe that reality is stable and can be observed and described from an objective viewpoint (Levin, 1988), i.e. without interfering with the phenomena being studied. They contend that phenomena should be isolated and that observations should be repeatable. Positivism acts as a guide for conducting the business research. It adheres to the view that only “factual” knowledge gained through observation (the senses), including measurement, is trustworthy. In positivism studies the role of the researcher is limited to data collection and interpretation through objective approach and full faith will be bestowed on the collected data and statistical results (Easterby-Smith, et al., 2008).
In case of phenomenology, it is generally observed that respondents may provide their irrational decision-making and cognitive biases while providing data (Bryman, 2012). Under the phenomenological philosophy, help from the social scientists is often required (Cassell and Symon, 2012).
The research will follow a positivism philosophy as the research interpretation would only depend on only factual data available on annual reports.
Research method is a systematic plan for conducting a research focusing on a decision to use either qualitative, quantitative or a mix of both for the research.
Qualitative research is exploratory, and it is used when it is not known what to expect, how to define a problem or how to develop an approach to the problem. Whereas quantitative research is expected to conclude the purpose as it quantifies a problem. Hence, quantitative method will be used for conducting the research.
Two of the most used research methods are: inductive and deductive. Deductive reasoning works from the more general to the more specific. Also known as “top-down” approach.
Inductive reasoning works the other way round, moving from specific observations to broader generalizations and theories where researcher begin with specific observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that can be explored. Inductive reasoning is more open-ended and exploratory, whereas, deductive reasoning is narrower in nature and concerned with testing or confirming hypothesis. As hypothesis testing is being conducted in this research with all numeric analysis, therefore, deductive reasoning approach shall be used in this research.
3.4 Data Collection
Data can be collected in two ways, Primary and Secondary.
For primary data, questionnaire, face to face interview, over the phone interview, mailing, focus group discussion is used. For secondary data, information from various sources and previous conducted research relevant to the topic is used.
In this research, data from annual reports will be used which would therefore be a secondary data collection method.
The purpose of sampling is to estimate an unknown characteristic of a population. Sample is subset of larger population. Sample will be selected from all the enlisted organizations in Dhaka Stock Exchange (DSE). Researches done earlier will be used as a guide to select organizations from various sectors. Stratified sampling will be used in the research and data of organizations from different sectors will be analyzed to conduct the research.
In total, 99 enlisted organizations are selected for data collection among which are: 29 commercial banks, 20 non-banking financial institutions, 22 chemical & pharmaceutical organizations and 28 textile organizations.
Chapter 4: Research Methodology
Research is conducted to investigate and evaluate the effect of ownership structure on financial performance of an organization.
1. Does change in directorial ownership affect financial performance of an organization?
2. Does government ownership affects organization’s financial performance?
3. Does institutional ownership affects organization’s financial performance?
4. Does foreign ownership have any effect on financial performance?
5. Does public ownership affect organization’s financial performance?
To understand how directorial ownership affects financial performance of an organization.
To determine relationship between institutional finance to the organization with the financial performance of the organization.
To understand how government ownership affects organization’s financial performance.
To estimate effect of financing from foreign owners on financial performance of an organization.
To determine the relationship between finance obtained from publicly issued shares and organization’s financial performance.
Hypothesis linked with directorial ownership affecting financial performance of an organization.
H0: Directorial ownership has no significant impact on financial performance
Ha: Directorial ownership has significant impact on financial performance
Hypothesis linked with government ownership affecting organization’s financial performance.
H0: Government ownership has no significant effect on financial performance
-Ha: Government ownership has significant effect on financial performance
Hypothesis linked with institutional ownership affecting organization’s financial performance.
H0: Institutional ownership does not affect financial performance
Ha: Institutional ownership affects financial performance
Hypothesis linked with finance from foreign owners on financial performance
H0: Foreign ownership has no significant relationship with financial performance
Ha: Foreign ownership has significant relationship with financial performance
Hypothesis linked with finance obtained from publicly issued shares and organization’s financial performance
H0: Public ownership does not affect financial performance
Ha: Public ownership affects financial performance
4.5 Theoretical framework
Corporate governance has become one of the most important aspects affecting financial performance of an organization. Ownership structure is one of the main dimensions of corporate governance and also influences it as conflicts of interest arises with change in structure of ownership which affects financial performance of the organization negatively.
Corporate governance is defined by Shleifer and Vishny (1997) in ways which entities/individuals financing the corporations are assured to get a return on their investment. On the contrary, Tirole (2001) states that the definition of traditional shareholder approach for measuring corporate governance is inadequate. In Tirole’s view, all stakeholders must be considered in designing of a corporate governance system who are affected by the firm’s decision rather than just the financiers. Shleifer and Vishny’s (1997) perspective is used in the research and also enhanced with definition from Eckbo (2006) who argued that an organization’s corporate governance incorporates all internal and external constraints which results in affecting financial performance of the organization.