IMPACT OF CAPITAL STRUCTURE ON PERFORMANCE OF NON-FINANCIAL LISTED COMPANIES IN PAKISTAN

Memoona Kanwal, Syed Jawad Hussain Shahzad, Mobeen ur Rehman, Muhammad Zakaria


DOI: http://dx.doi.org/10.22555/pbr.v19i2.1450

Abstract


This study examines the relationship between capital structure and
financial performance using a broad sample of 213 non-financial firms
listed on the Karachi Stock Exchange (KSE) over the period 1999-
2015. The relationship between financial performance and capital
structure is estimated using fixed and random effect models. Sectorwise
comparison shows that for the majority of sectors, higher shortand
long-term debt has a significant negative impact on financial
performance; however, magnitude of this effect varies across industries.
The results suggest that in order to improve performance, companies’
management should decrease their reliance on debt finance.


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