The Impact of Capital Structure On Firm Performance: Evidence From Pakistan
Abstract
The purpose of this study was to investigate the impact of capital structure on firm performance.
A whole population of 155 Non-financial textile sector companies listed at Karachi Stock
Exchange (KSE) were taken as census for data analysis for the period 2007-2012. For this
purpose, data was collected through Financial Statement Analysis (FSA) report given on the SBP
website. After the collection of Time series, Panel data two different tests correlation and
regression analysis were run as a statistical tool for data analysis. Correlation test was conducted
to check the percentage of association between dependent and independent variables. While
regression analysis was conducted to check the impact of capital structure on firm performance.
Econometrics model was run through regression. In the model, dependent variable return on
assets was regressed on two independent variables debt and equity, Data analysis was done
through SPSS. Results showed a statistical significant association between independent variables
debt and equity with dependent variable return on assets. Hence, it was concluded that capital
structure is linked firm performance.
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