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The Determinants of Capital Structure of the Chemical Industry in Pakistan


Author Info

  • Muhammad Rafiq

    (Institute of Management Sciences, Peshawar, Pakistan.)

  • Asif Iqbal

    (Institute of Management Sciences, Peshawar, Pakistan.)

  • Muhammad Atiq

    (CECOS University, Peshawar, Pakistan.)


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.

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Bibliographic Info

Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

Volume (Year): 13 (2008)
Issue (Month): 1 (Jan-Jun)
Pages: 139-158

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Handle: RePEc:lje:journl:v:13:y:2008:i:1:p:139-158

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Related research

Keywords: Chemical; Panel Data; Karachi Stock Exchange; Pakistan;

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Cited by:
  1. Chhapra, Imran Umer & Asim, Muhammad, 2012. "Determinants of capital structuring: an empirical study of growth and financing behavior of firms of textile sector in Pakistan," MPRA Paper 51068, University Library of Munich, Germany.
  2. Hamid Ahmad & Bashir A. Fida & Muhammad Zakaria, 2013. "The Co-determinants of Capital Structure and Stock Returns: Evidence from the Karachi Stock Exchange," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(1), pages 81-92, Jan-June.


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