Browsing by Author "Talat Afza"

Now showing 1 - 3 of 3
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    Determinants of capital structure across selected manufacturing sectors of Pakistan
    (Centre for Promoting Ideas, USA, 2011) Talat Afza; Amer Hussain
    The present study examines the industry specific attributes of firms in Automobile, Engineering, and Cable and Electrical Goods Sectors affecting the determinants of capital structure and validates the results with Booth et. al. (2001) and Rajan and Zingales (1995) .The study uses pooled data regression model on the sample of 22 Automobile, 7 Cable and Electrical Goods and 8 Engineering Firms to identify the determinants of capital structure. The debt to total assets ratio is used as a proxy for leverage and the impact of size, profitability, tangibility of assets, cost of debt, taxes, liquidity and non debt tax shield is analyzed on leverage. It is pertinent to report that the study uses liquidity, tax and cost of debt variables which were not used in the earlier studies conducted in Pakistan on industry specific attribute of capital structure and have significant influence on debt financing decisions. The empirical results reflects that firms of these three sectors with good liquidity position and large depreciation allowances use retained earnings, followed by debt financing for growth and smooth operations and equity financing is considered as a last resort. The results supported the Static Tradeoff Theory and Pecking Order Theory.
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    Determinants of capital structure: a case study of automobile sector of Pakistan
    (Interdisciplinary Journal of Contemporary Research in Business, 2011) Talat Afza; Amer Hussain
    The present study focuses on the determinants of capital structure of Automobile Sector of Pakistan. The research examines whether the industry specific attributes of Automobile Sector affect the capital structure choice of firms and validates our results with Rajan and Zingales (1995) and Booth et. al. (2001) and provide an explanation for the behavior of firms in choosing debt equity ratio. The study uses pooled data regression model on the sample of 26 firms of Automobile sector of Pakistan and uses liquidity and cost of debt variables which were not used in earlier studies in Pakistan and have significant influence on the debt and equity financing decisions. The results show that the firms which are large in size and having good assets structure should go for debt financing to finance new projects. The results of profitability, taxes and liquidity are statistically significant and are consistent with Static Trade off Theory and Pecking Order Theory.
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    Diversification and corporate performance: an evaluation of Pakistani firms
    (2008) Choudhary Slahudin; Talat Afza; Mian Sajid Nazir
    Diversification continues to be an important strategy for corporate growth and better financial performance. The relationship between the diversification strategy and profitability as well as diversification and market power has been explored by a number of studies for the developed economies. The present study is an attempt to investigate the relationship between diversification and a firm’s financial performance in the case of Pakistan. A sample of 65 firms have been categorized as diversified and non-diversified. For these firms, the financial performance in terms of risk and return has been analyzed with the return measured by Return on Assets (ROA), Return on Equity (ROE), Market Rate of Return (MKRT) and Tobin’s q, and the coefficient of variation used as the measure of risk. The results show that the non-diversified firms performed better than the diversified firms. However, the high return of non-diversified firms is accompanied by low risk and the low return of diversified firms is more risky. But there is a contrast in results based on book values and market values. The paper concludes that managers have to be careful while selecting the degree of diversification since the diversified firm may capture more market share but it can reduce its profitability