DETERMINANTS OF CAPITAL STRUCTURE AN ANALYSIS OF PAKISTANI CEMENT INDUSTRY

Abstract

This research has purpose to explore the various determinants while choosing the optimal capital structure of the public listed companies from cement industry of Pakistan. The six independent variables which are tangibility of assets, financial expense, growth, profitability, non-debt tax shield, size were tested. The panel data of 15 companies out of 20 for the five year period (2006- 2011) is studied through fixed effect regression analysis. The study concluded that tangibility of assets, financial expense, profitability, non-debt tax shield and size showed the positive relationship with leverage, while only growth showed negative relationship with leverage. The tangibility of the assets only was statistically significant, while all other variables like size, profitability, growth, financial expense and non-debt tax shield were statistically insignificant