DETERMINANTS OF CAPITAL STRUCTURE OF TEXTILE SECTOR OF PAKISTAN

Abstract

Purpose –

The primary aim of the study is to determine the potential determinants of capital structure for the textile industry of Pakistan.Capital structure assessment is most critical and decisive part for any firm as they effect directly to the cost and value of firm. For this, the research will examine the different key factors that affect capital structure of firm.

Design/methodology/approach –

The thesis is “Quantitative” in nature, where the findings and discussion would be based on scientific calculations of the selected variables. The thesis has exploited the Multiple Regression Analysis, using the SPSS software to determine the relationship between the dependent variable (leverage) with the independent variables (sales, tangibility of fixed assets, firm size, profitability, taxation, financing cost and number of shares). Findings –

Result of the study shows that there is insignificant relation between leverage (dependent variable) and firm size, number of shares, sales, and taxation (independent variable) of the textile sector of Pakistan. While Leverage (dependent variable) and total assets, financial cost and profit (independent variable) has significant relation in textile sector of Pakistan.

Practical implications –

The factors argued and outcome of the study helped to fascinate and develop base of determinants of optimal capital structure and that may assist to textile sector companies in Pakistan to take effective and precise decision linked to capital structure needs. Moreover, this study and its finding may help the decision makers better adjust themselves in implementing and considering dexterous ways of managing capital structure of textile sector.