Determinants of Capital Structure - A Study of Oil and Gas Sector of Pakistan

Sabir, Mahvish; Malik, Qaisar Ali
February 2012
Interdisciplinary Journal of Contemporary Research in Business;Feb2012, Vol. 3 Issue 10, p395
Academic Journal
Capital structure decisions have been the most significant decisions to be taken by the finance experts in a corporate sector organization. The study intends to analyze the effect of profitability, tangibility, size and liquidity on capital structure decisions of the listed companies in oil and gas sector of Pakistan. The study attempts to provide information that may help in taking capital structure decisions in listed companies of oil and gas sector of Pakistan, which will ultimately support in maximization of the value of firms on the one side and the minimization of cost of capital on the other side. The results indicated that profitability is the only variable that showed negative relationship against the dependent variable leverage, whereas the other three variables, liquidity, size and tangibility have positive relationship with leverage. The study concludes that capital structure decisions in listed oil and gas sector companies are mostly determined by the factors studies. The study substantiates the findings of most of the researches conducted on capital structure, concluding that there is an optimal capital structure that is affected by a variety of internal and external factors.


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