DETERMINANTS OF CORPORATE CAPITAL STRUCTURE: EVIDENCE FROM PSX LISTED MANUFACTURING SECTOR FIRMS IN PAKISTAN

Abstract

This study is an exploratory endeavor to investigate the determinants of capital structure by selecting a simple random sample of 50 manufacturing sector listed firms on PSX during a three-year period beginning in 2021 and ending in 2023, using the panel data approach. Ten independent variables and one dependent variable (leverage) were investigated with OLS regression analysis. The findings of this study show that firm size and liquidity are key predictors of capital structure in Pakistan's corporate manufacturing sector enterprises across the study period. Other characteristics, such as dividend payout ratio, sales growth, non-debt tax shield, return on assets, profitability, tangibility, tax rate, and uniqueness, have had little or no influence on the leverage of Pakistani manufacturing sector enterprises over the study period.