Business Review


This study empirically identifies the factors that explain the capital structure choice pattern of listed companies during 1964–2000. Three measures of debt (total debt ratio, long term book debt ration, and long term market debt ratio) are explained by a set of independent fundamental variables such as growth of firm, size of firm, tangible asset, profitability, earning variability, market to book ratio, and reforms. The analysis is also done to identify any capital structure pattern prevail across various industries in Pakistan. Most of the results are consistent with theory and similar to other empirical studies. The growth and profitability of the firm have negative impact on leverage whereas, size of the firm, tangible asset, earning variability and market to book ratio have positive impact on leverage. The extent of leverage has declined during reform period. However, the coefficient of reform dummy is statistically insignificant. The pattern of leverage is significantly different across most industries due to variation in industry specific policies in Pakistan.


Tangible asset, Earning variability, Leverage



Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Published Online

March 05, 2021



Publication Stage



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