This research/study has been conducted on the capital structure of the cement industry Pakistan taking the sample of 11 companies out of the population of 24 companies registered on the Karachi stock exchange of the period 2001 to 2015. This study used the least square method to find out the relationship of dependent and independent variables.
It has taken leverage as a dependent variable and firm size, growth, liquidity, tangibility, non debt tax shield, and profitability as a independent variables, while the 3 independent variables have not supported the assumption (riddance test) of linear regression model, which is profitability liquidity and growth, thus its carry out the research on the remaining 4 variables which is dependent variable leverage and independent variables non debt tax shield, tangibility and firm size.
The outcome of the research is demonstrated after analyzing that there is negative relationship in between the firm size and Non debt tax shield with leverage, while there is positive relationship in between the tangibility and leverage. So after analyzing it has been determined the main determinates of capital structure of the cement industry is tangibility of asset.
Table of Contents
CHAPTER I
INTRODUCTION
Background
Capital Structure
Problem Statement
Research Objective
Research Question
Significance of the study
Definition of Key Term:
CHAPTER II
LITERATURE REVIEW
CHAPTER III
Data and Methodology
Regression Model
Definition of Variable
Dependent and Independent Variables
Hypothesis Development
Assumption of Regression
CHAPTER IV
RESULT AND ANALYSIS
Plot and Histogram Graph
Descriptive Statistics
Riddance Variable Test
Proof of Assumption for Regression
Linear Regression Model
Hypothesis Testing
CHAPTER V
CONCLUSION AND RECOMDENATION
Conclusion
Recommendation
Objectives and Scope
This study aims to investigate the key determinants influencing the capital structure decisions of the cement industry in Pakistan. By analyzing a sample of 11 companies listed on the Karachi Stock Exchange over the period 2001-2015, the research seeks to identify the specific economic variables that impact leverage and to determine whether these companies follow established capital structure theories such as the Pecking Order Theory or the Static Trade-off Theory.
- Analysis of the relationship between leverage and independent variables (firm size, tangibility, non-debt tax shield).
- Evaluation of the impact of asset tangibility on the cost of debt for cement firms.
- Testing of statistical assumptions including homoscedasticity and autocorrelation.
- Identification of the primary determinants of capital structure within the Pakistani cement sector.
Auszug aus dem Buch
Capital Structure
The Capital Structure is the combination of debt, equity and the retained earnings. Debt means that firm uses debt source of generating the funds in the form of debt, debenture, bond from the banks/financial institutes on interest basis, while the Equity/share source means that the firms using share source for generating the fund from general public/institutes in the form of common share and preference share. The share is basically ownership certificate of the firm, which is the firm inviting the general public to purchase them, and the firms pays dividend as a reward to the shareholder regularly. The Retained earning also might be used as a source of generating fund, which is the internal source financing of the company, while other sources are external. The firms retained some fund from their profit for their upcoming situation such like expansion of business/projects etc, so the firm can use this source also for financing which is very cheap as compared to other.
Summary of Chapters
CHAPTER I: Provides the background of the cement industry in Pakistan and outlines the research objectives, core problem statement, and key definitions used in the study.
CHAPTER II: Reviews relevant literature concerning capital structure theories and previous empirical studies regarding determinants of leverage across different sectors and countries.
CHAPTER III: Details the research methodology, including data sources, variable selection, the regression model equation, and the development of testable hypotheses.
CHAPTER IV: Presents the empirical results and statistical analysis, including plots, descriptive statistics, assumption testing, and the final linear regression model findings.
CHAPTER V: Concludes the research by summarizing the findings regarding the determinants of capital structure and provides recommendations for firm management.
Keywords
Capital Structure, Leverage, Cement Industry, Pakistan, Karachi Stock Exchange, Regression Model, Tangibility of Assets, Firm Size, Non-Debt Tax Shield, Pecking Order Theory, Static Trade-off Theory, Profitability, Liquidity, Debt, Equity.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on identifying the determinants of capital structure within the cement industry in Pakistan using a sample of 11 companies listed on the Karachi Stock Exchange.
What are the primary thematic areas covered?
The study covers capital structure theories, financial leverage dynamics, and the impact of firm-specific variables like size, profitability, and asset tangibility on financing decisions.
What is the main research objective?
The primary goal is to determine the key factors that influence the capital structure and to examine how leverage is associated with variables such as asset tangibility and firm size.
Which methodology is utilized?
The study employs a linear regression model based on secondary data gathered from the Karachi Stock Exchange and the State Bank of Pakistan, covering the period 2001 to 2015.
What topics are discussed in the main body?
The main body covers the literature review of existing studies, the formulation of hypotheses, the methodology for testing regression assumptions, and a detailed results analysis.
Which keywords best describe this work?
Key terms include Capital Structure, Leverage, Cement Industry, Pakistan, Regression Model, and Tangibility of Assets.
How does asset tangibility affect leverage according to the results?
The research determined that there is a positive relationship between the tangibility of assets and leverage, suggesting that firms with higher fixed assets can secure debt at lower rates.
What is the recommended financial strategy for management?
The study recommends that management focus on the tangibility of assets when making financing decisions and suggests avoiding an over-reliance on short-term debt, as it may negatively impact performance.
- Arbeit zitieren
- Muhammad Bilal (Autor:in), 2015, Determinants Of The Capital Structure Of The Cement Industry From Pakistan, München, GRIN Verlag, https://www.grin.com/document/315631
