Impact of Earning Management on Capital Structure of Listed Companies on Karachi Stock Exchange (KSE) Pakistan

Abstract

Earning management is increasingly important subject of study of corporate governance, especially in the current decade of modern world. It is strategic issue for companies in Pakistan like all over the world.The current study aimed to investigate the impact of earning management on the capital structure of listed companies of Karachi Stock Exchange (KSE). A sample of one hundred and twenty five companies of KSE was taken for research study. For the analysis of data, multiple regression model approach was applied. Gearing ratio was taken as dependent variable whereas absolute discretionary accruals, ROA, ROE, and Total assets were used as independent variables. The results revealed that absolute discretionary accruals had insignificant effect on dependant variable. The effect of total assets was found positive while ROA & ROE had negative impact on the capital structure of the listed companies on Karachi stock exchange.

Keywords: corporate governance, Earning Management, capital structure, Karachi Stock Exchange, Gearing ratio, ROA, ROE