An Evaluation of Determinants of Capital Structure in Oil Sector of Pakistan

Abstract

Purpose: The purpose ofthis research is to identify the determinants ofcapital structure ofoil sector in Pakistan. Methodology: The research design used in this study is explanatory study and the data is collected from secondary sources like research papers, books, journals, articles, and periodicals. The data is collected for five years and in total 8 oil companies of Pakistan taken into consideration. The purposive sampling technique is used in this study. In this study, Return on Assets (ROA), tangibility ofassets (Tang), firm size (size), growth, and inflation are independent variables and debt to equity (DE) ratio as dependent variable. are Findings: The results show that ROA and size have statistically significant impact on DE, while tang, growth, and inflation have insignificant impact on DE. Limitations: This study uses secondary data sources, which might not accurately reflect the study's needs, is one of its weaknesses. The fact that this analysis was restricted to only four variables including leverage, firm size, profitability, and tangibility, inflation, and growth is another limitation. It should be emphasized that numerous factors other than those covered in this study that are related to profitability have an impact on profitability. Conclusion: These results will be important for policy makers and top management of oil companies ofPakistan to consider the results ofthis study and devise the policies and strategies accordingly.