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The Determinants of Capital Structure of the Chemical Industry in Pakistan

Rafiq Muhammad, Asif Iqbal () and Muhammad Atiq ()
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Asif Iqbal: Institute of Management Sciences, Peshawar, Pakistan.
Muhammad Atiq: CECOS University, Peshawar, Pakistan.

Lahore Journal of Economics, 2008, vol. 13, issue 1, 139-158

Abstract: This study is an attempt to determine the capital structure of listed firms in the chemical industry of Pakistan. The study finds that by studying a specific industry's capital structure, one can ascertain unique attributes, which are usually not apparent in the combined analysis of many sectors as done by Shah and Hijazi (2004). This study analyzed 26 of 39 firms in the chemical sector, listed at the Karachi Stack Exchange for the period 1993-2004 using pooled regression in a panel data analysis. Six regressors i.e. firm size, tangibility of assets, profitability, income variation, non-debt tax shield (NDTS) and growth were employed to examine their effects on leverage. The results show that these six independent variables explain 90% of variation in the dependent variable and, except for firm tangibility, results were found to be highly significant. The study has policy implications of importance for researchers, investors, analysts and managers.

Keywords: Chemical; Panel Data; Karachi Stock Exchange; Pakistan (search for similar items in EconPapers)
JEL-codes: C13 C23 C51 L65 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:lje:journl:v:13:y:2008:i:1:p:139-158