Pakistan Institute of Development Economics



The Determinants of Capital Structure of Stock Exchange-listed Non-financial Firms in Pakistan

Capital structure refers to the different options used by a firm in financing its assets. Generally, a firm can go for different levels/mixes of debts, equity, or other financial arrangements. It can combine bonds, TFCs, lease financing, bank loans or many other options with equity in an overall attempt to boost the market value of the firm. In their attempt to maximise the overall value, firms differ with respect to capital structures. This has given birth to different capital structure theories that attempt to explain the variation in capital structures of firms over time or across regions. On the other hand, empirical evidence is also not sometime consistent in substantiating a particular capital structure theory.

Attaullah Shah, Tahir Hijazi