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The Determinants Of Capital Structure In The Textile Sector Of Pakistan

Author

Listed:
  • Muhammad Akbar

    (Bahria University, Islamabad)

  • Shahid Ali

    (Institute of Management Sciences, Peshawar)

  • Faheera Tariq

    (Bahria University, Islamabad)

Abstract

This paper investigates the determinants of corporate capital structure in the Pakistani textile industry after Rajan and Zingales (1995), Shah and Hijazi (2005) and Hijazi and Tariq (2006). Data related to four independent variables (size, growth, profitability and tangibility) and one dependent variable (leverage) for 155 companies of the total 167 companies of the textile sector listed on the Karachi stock exchange over the sample period (1999-2004) was analyzed using regression analysis. The results are consistent with the findings of the previous studies. The findings support the researchers’ hypotheses that size and profitability have positive relationship with leverage. Further the findings confirm a positive relationship between tangibility and leverage as expected. However, the findings suggest a negative relationship between growth and leverage contrary to the researchers’ hypothesis

Suggested Citation

  • Muhammad Akbar & Shahid Ali & Faheera Tariq, 2009. "The Determinants Of Capital Structure In The Textile Sector Of Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 1(1), pages 15-19, April.
    • Handle: RePEc:bec:imsber:v:1:y:2009:i:1:p:15-19
    DOI: .
    as

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    References listed on IDEAS

    as
    1. Saumitra Bhaduri, 2002. "Determinants of capital structure choice: a study of the Indian corporate sector," Applied Financial Economics, Taylor & Francis Journals, vol. 12(9), pages 655-665.
    2. Harris, Milton & Raviv, Artur, 1990. "Capital Structure and the Informational Role of Debt," Journal of Finance, American Finance Association, vol. 45(2), pages 321-349, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Shah, Mohay Ud Din & Shah, Attaullah & Khan, Safi Ullah, 2017. "Herding behavior in the Pakistan stock exchange: Some new insights," Research in International Business and Finance, Elsevier, vol. 42(C), pages 865-873.
    2. Ummar Aftab & Attiya Yasmin Javid & Waseem Akhter, 2018. "The Determinants of Cash Holdings around Different Regions of the World," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(2), pages 151-182, June.

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    More about this item

    Keywords

    Capital structure; textile; profitability; growth;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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