Master of Business Administration Executive
Faculty / School
Faculty of Business Administration (FBA)
Year of Award
MBA Executive Research Project
Organizational effectiveness, Performance, Pakistan
Purpose: The purpose of this research work is to identify the significant or insignificant impact of factors related to capital structure on the performance of the company. In addition, this study will take into account the impact of concentrated ownership which was not part of most of the past research work in Pakistan.
Research Methodology: This research has been carried out on both primary and secondary data. For primary research, a newly designed questionnaire comprised of 28 questions, 6 independent variables and 1 dependent variable was produced through focus group. Feedback of 40 senior finance professionals was measured by SPSS statistical package, reliability test (cronbach’s alpha), correlation and regression analysis were performed. Secondary research was conducted through the use of panel data of 20 public listed companies of Pakistan representing 10 different sectors. Panel data is represented by two dependent variables (ROE & ROA), 4 independent variables (Short term debt. Long term debt, Total debt to total assets and Concentrated Ownership) and 2 control variables (Asset Tangibility & Growth). Data analysis was conducted on Eviews statistical package. Descriptive statistics. Stationary test(Levin, Lin & Chu t*), Hausman test and Random effect model of regression were performed in order to obtain results.
Findings:Reliability statistics of primary study reveals that the alpha coefficient for the 28 items is .685. The independent variables in primary study are explaining dependent variable up to the extent of 48%. In the case of secondary study, R square value of ROE and ROA is 42% & 24% respectively. The primary study concludes that out of 6 independent variables, only “Capital Structure Mix Equity” is significantly impacting the company performance. While the secondary study concludes that only “Growth” which is control variable hold significant relationship on Return on Equity (ROE), not a single independent or control variable hold significant relationship on Return on Assets ROA
Research Limitations: Limitations of this study includes; relatively small period (2013 to 2016), small sample size, absence of macroeconomic factors and market based profitability measure as dependent variable..
Practical Implications: Though this research work empirically provides evidence that performance of the company is not influenced by factors related to capital structure, corporate managers must regularly analyze the cost of capital in relation to profit maximization and identify optimum capital structure mix.
Link to Catalog Record
Ilyas,, S. (2017). Analysis of capital structure & its impact on listed companies performance in Pakistan (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-emba/148
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