Credit Rating, Information Assymetary And Capital Structure Of Non-Financial Firms: An Evidence From Pakistani Listed Companies

Abstract

This study conducted for non-financial sector of Pakistan, No of observation for the study is 600 and no, of groups are 120. Capital structure and discretionary accrual are dependent variables and credit rating, profitability, and liquidity are independent variables. There are two models in study one is for the impact of credit rating, profitability and liquidity on capital structure. And the other is to check the impact of credit rating and profitability on discretionary accrual. The results of the study show that credit rating and profitability positively impact capital structure and liquidity has 4 negative impact on capital structure. For second model credit rating and profitability positively impact discretionary accrual. High rated firms more actively involved in asymmetry information. Due to which in financial market investors invest in firms which increase profitability of firm.