CAPITAL STRUCTURE : KEY FACTORS DETERMINING CAPITAL STRUCTURE OF TEXTILE INDUSTRY OF PAKISTAN

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.