They observed in Pakistan rate of dividend distribution was the highest in South Asia: at 7 percent; while in China, 2.3 percent; India, 1.5 percent; and emerging Asia, 2.5 percent. The government should do away with the general concept of not paying dividends by some companies and should not force them to declare dividend.
According to the paper, Pakistan's ratio of vulnerability was 4.3 percent, which was significantly lower than emerging Asia as a whole, but higher than India at 1.9 percent.
However, in Pakistan, textiles sector was more vulnerable to international shocks, about 33 percent, as compared to other sectors, while sugar - with vulnerability of about 4.6 percent - also contribute to international exposure.
According to them, corporate sector in Pakistan has witnessed remarkable developments due to the government's successful market-oriented structural reforms. The corporate governance framework has also significantly improved over the past five years, they said.
About the corporate owner and control, the paper assess that concentration of corporate control within families remains problematic for effective governance, efficiency and equity market development.
In Pakistan, about 37 percent of the share capital of an average company is owned by top five shareholders, while it is 38 percent in Korea and 60.8 percent in South East Asia.
Much of the financial indicators showed significant improvements in terms of reduced vulnerability, and favourable comparison relative to region and countries.
The paper also praised Pakistan for making remarkable progress in strengthening its corporate governance framework and for that the Securities and Exchange Commission has issued a code of good governance in 2003.
Besides, Pakistan, after significant reforms in recent years (establishment of banking courts and legal changes to facilitates collection and resale of collateral), fared generally better than other South Asian countries in regard to legal rights, credit information, disclosure, and cost of enforcing contracts and closing a business.
The paper further lists certain challenges for policy-makers which are: further improvement in effective enforcement of the corporate governance framework which encourages public listings, and acceptance of the role of institutions in addition to minority shareholders.
Monitor and manage any deterioration in corporate debt indicators, which is associated with a more credit-driven acceleration in economic growth.
Greater reliance on fresh equity capital and long-term financing should be encouraged.
Address factors explaining high-level of risks and uncertainty, which the market allocates to future earnings and which discourage investment.