Determinants of Capital Structure – Evidence from Karachi Stock Exchange 30-Index

Abstract :

In this study to analyze Karachi Stock Exchange listed companies with respect to determinants of capital structure. This study is focused on KSE-30 index companies which provide the benchmark for the stock price performance over the time period. Data has been analyzed for the period 2006-2010 by using OLS regression with five variables i.e. firm size, growth rate, earning rate, debt service capacity and degree of operating leverage. For examining determinants of capital structure Pecking order theory and Trade-off theory are pertinent theories. Results show that firm size, earning rate and operating leverage have negatively significant on leverage and growth and debt service capacity have positively significant on leverage.