The Determinants of Capital Structure of Stock Exchange-Listed Non-Financial Firms in Pakistan PDF Download

Author: Attaullah Shah
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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In this paper, we study the potential determinates of the capital structure of non-financial firms listed on Karachi Stock Exchange. We analyse a sample of 445 firms listed on the KSE for the period 1997-2001. We have chosen tangibility of assets, size, firm growth rate, and profitability as independent variables, and measure their effect on debt/total asset ratio (proxy for leverage). Using the technique of panel data analysis, we observe that of the four independent variables, growth, size, and profitability have significant effect on leverage. However, we do not find tangibility as significantly correlated with leverage.

Author: Mumtaz Hussain Shah
Publisher:
ISBN:
Category :
Languages : en
Pages : 14

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This study is undertaken to discover the factors determining the capital structure decision of non-financial Pakistani firms. The effect of firm's profitability, liquidity, size, tangibility and non-debt tax shield on capital structure decision of ten non-financial firms operating at Pakistan Stock Exchange is investigated for a period of ten years i-e from 2005-2014. By using fixed effects panel estimation method it is found that leverage ratio is inversely affected by profitability and current ratio of a firm. While, firm size, tangibility and non-debt tax shield positively effects leverage ratio. The influence of profitability is weakly significant whereas that of liquidity, size, tangibility and non-debt tax shield are strongly significant. The study also shows that results for profitability and liquidity are in accordance with the Pecking Order Theory and the result for size; tangibility and non-debt tax shield are in line with the Trade-Off Theory.

Author: Leora Klapper
Publisher: World Bank Publications
ISBN:
Category : Business law
Languages : en
Pages : 60

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"Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R & D or industries that need more external finance"--National Bureau of Economic Research web site.

Author: Farhan Iqbal
Publisher: GRIN Verlag
ISBN: 3668169403
Category : Business & Economics
Languages : de
Pages : 23

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Wissenschaftlicher Aufsatz aus dem Jahr 2015 im Fachbereich BWL - Investition und Finanzierung, , Sprache: Deutsch, Abstract: This paper is an attempt to determine the capital structure of listed firms of the cement industry in the Pakistan stock exchange (KSE). The main objectives of this empirical study is to forecast the relationship of dependent variable (financial leverage) with independent variables (size, tangibility, profitability, liquidity, tax rate and growth rate). The study showed a positive and significant association of firm size, tangibility and tax rate with financial leverage of the firm but in contrast to this, profitability, liquidity and growth rate showed a negative relationship with financial leverage.

Author: Muhammad Islam
Publisher: LAP Lambert Academic Publishing
ISBN: 9783659492297
Category :
Languages : en
Pages : 80

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The purpose of this research is to investigate various factors affecting Earning per Share and Return on Capital Employed. In this study an attempt has been made to determine what factors can affect firm value or not?. Different theorists argue differently regarding components of capital structure such as debt, equity and preferred stock on firm value. In this study this relationship has been empirically evidenced in the sugar industry companies listed on Lahore Stock Exchange. This study investigates the relationship of Short Term Debt, Long Term Debt, Equity, Firm Size and Tangibility of Assets with Earning per Share (EPS) and Return on Capital Employed (ROCE) using Simple and Multi Linear Regression Models. The data that has been collected from financial statement of companies related to sugar industry of Pakistan listed on Lahore Stock Exchange.

Author: Wali Ullah
Publisher:
ISBN:
Category :
Languages : en
Pages : 23

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This study empirically examines the determinants of capital structure choice of listed firms in Pakistan. A pooled sample of 535 public listed non-financial companies from 1988 to 2005 is used to establish the relationship between leverage and its determinants by using autoregressive distributed lag (ARDL) econometric framework. The results indicate that size of the firm and growth opportunities are positively related to debt ratio. A highly consistent result is that more profitable and highly liquid firms will avoid debt and will rely mainly on equity financing. Similarly firms with high risk and more tangible assets will use less debt. Moreover the results suggest that state owned firms have been financed heavily through bank loans and that there is a substantial decrease in leverage after the reforms in financial and corporate sector of 1990s in Pakistan. The secondary market development and financial liberalization has been associated with shift of firms from debt market to equity market. There is strong evidence indicating that choice of capital structure differs significantly across industries.

Author: Muhammad Bilal
Publisher: GRIN Verlag
ISBN: 3668155860
Category : Business & Economics
Languages : en
Pages : 80

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Master's Thesis from the year 2015 in the subject Business economics - Operations Research, University of Lahore (Lahore Business School), language: English, abstract: This research/study has been conducted on the capital structure of the cement industry Pakistan taking the sample of 11 companies out of the population of 24 companies registered on the Karachi stock exchange of the period 2001 to 2015. This study used the least square method to find out the relationship of dependent and independent variables. It has taken leverage as a dependent variable and firm size, growth, liquidity, tangibility, non debt tax shield, and profitability as a independent variables, while the 3 independent variables have not supported the assumption (riddance test) of linear regression model, which is profitability liquidity and growth, thus its carry out the research on the remaining 4 variables which is dependent variable leverage and independent variables non debt tax shield, tangibility and firm size. The outcome of the research is demonstrated after analyzing that there is negative relationship in between the firm size and Non debt tax shield with leverage, while there is positive relationship in between the tangibility and leverage. So after analyzing it has been determined the main determinates of capital structure of the cement industry is tangibility of asset.

Author: Farah Yasser
Publisher:
ISBN:
Category :
Languages : en
Pages : 23

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Book Description
To have an ideal mix of debt and equity in a balance sheet of an entity is till to date a very complicated issue for managers as there is no such rule to predict an optimal capital structure. An in-depth understanding is required for the corporate culture, the degree of the development of the capital market and the economy in which the firms operate. This study seeks to investigate the leverage composition of Pakistani corporations through their determinants. Fixed effect regression is used to show the relationship of determinants of capital structure on leverage corporations listed on Karachi Stock Exchange (KSE) for the period of 2006 to 2013. The results suggest that agency cost, growth, age, and size are significantly and negatively associated with the capital structure of Pakistan firms, however, collateral value of asset is significantly but positively associated with the capital structure of the firm. On the other hand, free cash flows, non debt tax shield, profitability, business risk and bankruptcy cost are not significantly associated with leverage composition of the firms and are against the signaling theory and peaking order theory. The key importance of this study is that no prior research was done for determinants like agency cost, free cash flows, bankruptcy cost and age as determinants of capital structure for Pakistani firms among other determinants. Further, this study does not confine to a particular sector rather it covers all companies listed by Karachi Stock Exchange.

Author: Agha Jahanzeb
Publisher:
ISBN:
Category :
Languages : en
Pages : 218

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Author: Muhammad Khan
Publisher:
ISBN:
Category :
Languages : en
Pages : 23

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Book Description
This study examines the applicability of two capital structure theories; i.e., Pecking Order Theory (POT) and Trade-Off Theory (TOT). An extensive panel dataset of 293 non-financial firms listed on the Karachi Stock Exchange (KSE) for the period 2001 to 2013 is used to test those hypotheses. The data is analyzed in three phases. First, we check the leverage behavior of all listed non-financial firms of Pakistan. Second, we test the applicability of capital structure theories for manufacturing and non-manufacturing firms separately, and third, the data is segregated into large and small firms based on asset size to test the relevance of theories. Besides, firm-specific variables, three macroeconomic variables are also included, such as lending rate, inflation, and market capitalization to GDP to observe how such factors influence the leverage behavior of Pakistani firms. Two regression techniques are applied to investigate the relationship: 1) Panel regression with industry fixed effects and 2) Heteroskedasticity & Autocorrelation (HAC) consistent standard errors regression. Moreover, the validity of two hypotheses are tested based on two equations/models. Evidence of first model suggests negative relationship of profitability, size, and growth with the firm's leverage, which confirms that, on average, Pakistani firms follow pecking order theory. In the second model leverage has positive and significant relationship with last year dividend, which shows firms with higher dividend payout ratios borrow more in subsequent year/(s). Lending rate has a positive impact on leverage, whereas, inflation, and market capitalization to GDP have insignificant impact on firms' leverage. Overall, the financing behavior is in favor of POT for the non-financial firms listed at KSE.