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
