Open AccessCORPORATE FINANCIAL POLICY AND ITS IMPACT ON SUSTAINABLE CAPITAL STRUCTURE: EMPIRICAL EVIDENCE FROM TEXTILE FIRMS OF PAKISTAN
Author(s) -
Khurram Sultan,
Ramyar Rzgar Ahmed,
Rahim Jafar,
Muhammad Muzammal Murtaza,
Bayar Gardi
Publication year - 2020
Publication title -
humanities and social sciences reviews
Language(s) - English
Resource type - Journals
ISSN - 2395-6518
DOI - 10.18510/hssr.2020.8218
Subject(s) - capital structure , variables , panel data , economics , profitability index , econometrics , asset (computer security) , regression analysis , debt ratio , debt , productivity , order (exchange) , monetary economics , business , finance , macroeconomics , statistics , mathematics , computer security , computer science
Purpose of the study: In this article, the objective is to discover the influence of business financial policy on the firm’s Capital structure of the textile zone of Pakistan. The present outcomes of productivity, total assets, future growth, and asset structure have started a discussion over the total debt ratio.
Methodology: The methodology used to conduct this work in order to examine the effect of total assets, future growth, profitability, and asset structure and its impact on total debt ratio, Panel data analysis has been accomplished and together the firm and industry explicit dynamics have been measured, yearly data has been taken off 96 textile firms of Pakistan concluded the period of 2012 - 2017 for OLS, regression model & LSDVM.
Main Findings: The results reveal that the OLS regression model is not a good fit and the model shows that there is no significant impact of all the independent variables on the dependent variables. Whereas the results of LSDVM indicated that this model is a good fit, the model revealed that the entire individuals have combined effect on the dependent variable. Similarly, the alternate hypothesis indicates the significant influence of independent variables on the dependent variable whereas the Null hypothesis indicated no or insignificant influence of independent variables on the dependent variable.
Application of this study: This study contributes toward the financial sector for policymakers in order to construct the best capital configuration of the firm. This study also suggests that which element is having more importance while making capital configuration of the firm.
The originality of this study: Capital structure is a crucial issue for entrepreneurs and CEOs of any firm. The number of studies is available related to other industries but fewer studies are available related to the textile firms of Pakistan so this research work provides the technique while making the best capital configuration for textile firms of Pakistan.