9 Pages Posted: 18 Aug 2011
Date Written: August 17, 2011
This paper focuses on investigating the effect of the profitability of the firm and its financial leverage on the capital structure of the automobile sector companies in Pakistan. To proceed with this, the capital structure of 11 listed firms has been analyzed by adopting an econometric framework over a period of five years. Estimating regression analysis and checking the relationship of the estimated model through Correlation Coefficient Test, we found that the profitability of the firm and its financial leverage have an insignificant impact on the capital structure of the studied firms during the examined period. Hence, the study is unable to establish any significant relation between profitability and financial leverage effect on the capital structure of a firm.
Suggested Citation: Suggested Citation
Rafique, Mahira, Effect of Profitability & Financial Leverage on Capital Structure: A Case of Pakistan’s Automobile Industry (August 17, 2011). Available at SSRN: https://ssrn.com/abstract=1911395 or http://dx.doi.org/10.2139/ssrn.1911395
By John Graham