Determinants of Capital Structure of Textile Industry in Pakistan

Abstract

The objective of this study is to analyze the financial model being opted by textile firms which are listed at the Karachi stock exchange in the context of capital structure theories. The analysis was based on a sample of 8 listed firms during the period 2009 to 2013. The results of pooled regression model show that both Static trade-off theory and Pecking order theory are related corporate capital structure theories to the firms in Pakistani Textile sector. The theoretical framework includes the corporate capital structure theories and modern research work in this field. Hypotheses are formulated on the basis of theoretical background. Regression model is used to analyze the data taken from Pakistani  textile firms.  Financing pattern of firms partially supports the Static trade-off theory and Pecking order theory.

Keywords: Static trade-off theory, Pecking order theory, Agency cost theory, leverage ratio, listed firms, corporate capital structure.