Abstract:
The Principle expectation of this research work is to find out and test that if the financial
and economic arrangement of listed firms in textile sector of Pakistan ensures any capital
structure theory or not. The comprehensive observation was conducted on a sample of
about 164 listed firms ranging from 2005-2010. I have applied two of the popular
theories of capital structure namely Trade off and Pecking order theory and check out that
which theory analyze better the financial performance of textile sector from 2005-
2010.For this purpose, I have applied regression modal on the selected variable to find
out the relationship and significance between these selected variables. Descriptive
statistics has also been used in this regard to indicate the summary statistics of various
variables used in the research work. It includes the maximum, minimum, mean, standard
deviation of all the explanatory variables of textile sector from the year ranging from
2005-2010. At the end, In order to find out the variation in independent variables, F
statistics have been applied to find out the significant proportion of the variation on the
dependent variable . At the end, it was concluded that Textile sector of Pakistan follows
both Trade off theory and Pecking order theory.
