Department of Finance

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The Financial And Intellectual Capital Structure’s Implication Of Pursuing a Strategy of Innovation
(University of Management & Technology, 2018) Muhammad Ali Sikander
Recently the experimental effort has protracted the variety of approaches interrelated with Leverage and make a sound strategy to find the relation of company innovation with Leverage. The firm that recently established in the market is highly dependent on the innovation and the competition in the market requires a solid innovation strategy to sustain in the market. Therefore, innovation importance can't be neglected at any phase of business life. At the same time, employees also play a major role to identify the best strategy that can increase company innovation as well as their performance. The key complication that a company faces today is innovation is highly interconnected with the Leverage of the firm. The modern studies show that more the company's managers are vigilant by setting their capital structure the more innovation business will produce so human capital play a vital role to implement strong innovation strategy. The financial slack of a company highly emphasizes on the firm's innovation. Our research is to find out the relationship of innovation with capital strategy. However, innovations affect intellectual capital while observing the impact on company's profitability. Therefore, this Research study is the illumination on innovation impacts on company capital structure and intellectual capital that company either invests owner equity or takes debts to boost innovation. We take 100 innovative companies from Forbes innovative firms as our sample and drive R&D intensity ratio (research and development) as substitute of innovation and applied regression by taking dependency of these companies on Leverage ratio and Intellectual Capital. This Research Study will help entrepreneurs to jump into the market with some logical thinking and this model will guide that how the market's most innovative firms are acting. This Research Study shows a strong response that a company financial strategy is an important part of the company to create innovation.
Relationship of Investment Levels with Earnings Management; Evidence from Pakistan
(University of Management & Technology, 2018) Athar Hussain
This study is all about earnings management and its relationship with firm's investment levels. In this study, investment levels are observed against the discretionary revenues (discretionary revenue in this study is used as a proxy for earning's manipulation), Tobin's Q, cash flows generated from operations, prior investment levels and prior growth in fixed assets. This study comprises of nine years data(2008 – 2016) of five manufacturing sectors of Pakistan(Textile, Cement, Sugar, Fertilizer and Oil and Gas). Data is takendirectly from the published financial statements of the public listed companies (listed on Pakistanstock exchange). Results of this study show that investment levels are significantlyrelated with the current period earnings manipulation, Tobin's Q, cash flows generated from operations and prior period investment levels, but there is no significant relationship between current investments levels with initial growth in fixed assets. Results also showthat firms tend to have higher investment levels than expected during the period in which earning is manipulated. Current period investment levels are not significantly related with the previous period's earnings manipulation and also not with the future period's earnings manipulation.
Productivity of Medical Instruments Export: Evidence from Punjab
(University of Management & Technology, 2017) Fazal-ur-Rehman
The primary purpose of this study is to inspect the relationship between export refinance scheme, hydel electricity production, interest rate, Dollar exchange rate, steel and gold price with the export of medical instruments. In order to ascertain the evidence of the relationship between various independent variables with the export of medical instruments, monthly data is used over the period from 2004 - 2015. The Johansen cointegration test, Vector error correction model is used under time series framework, the empirical results indicate relationship exist between export refinance scheme, hydel power, Dollar exchange rate, steel price and the export of medical instruments, while no relationship observed between gold and medical instruments export. This research study conclude that the Government of Pakistan should take initiatives to enhance the export refinance scheme, hydel electricity production in order to mitigate financial, market and operational risk in the medical instruments manufacturing and export sector of Punjab.
Does Hot Money Drive Pakistan’s Capital and Real Estate Market? A case from Pakistan
(University of Management & Technology, 2017) Rasheed, Isma
The primary purpose of this study is to examine the impact of hot money on major economic markets of Pakistan such as stock market, and real estate market. Hot money or speculative cash inflow is generally associated with higher volatility. It can create financial bubbles. Particularly in emerging economies, hot money or speculative cash inflows are considered as major influential factor on these major markets. In order to ascertain the evidence of underlying facts we have used hot money as dependent variable and two major economic indicators KSE_100 and Housing price as independent variable. Sharp Ratio and policy rate are taken as control variable. Monthly data is collected from January 2011 to December 2016. To determine the impact of hot money on these economic markets robust time series techniques such as Augmented Dickey-Fuller test, JJ co integration, Granger causality, Impulse response function and Variance decomposition tests are applied. Test results indicate that hot money has marginal influence to explain volatility in real estate and capital market of Pakistan. Our economic conditions affect the behavior pattern of investors. Study results also depict a very little contribution of short term speculative funds for these two markets. The volatility and rise in these two markets may be the cause of GDP growth, bank lending’s, rural-urban migration and urbanization. There might be a functional role of terrorism, peace conditions in Pakistan, political instability; higher level of remittances, family owned business set up of Pakistan can be the reason of marginal influence of hot money in Pakistan.
Factors affecting children immunization in Lahore
(University of Management and Technology, 2017) Syeda Tahseen Fatima
Immunization is the cost effective way to prevent disease with use of vaccine. In 1974 WHO introduce expanded program of immunization (EPI) to vaccine children throughout the world. Cross sectional study was conducted to contribute information regarding factors effecting immunization in children <3 years of age at Lahore. Immunization coverage is better in Lahore as compare to other cities but still vaccination status of children in Lahore is not 100%. Factors may include poor knowledge about vaccination nearby health care center, vaccination card etc... Interviews were conducted specifically designed questionnaire with question about reasons of poor immunization status among children. Analysis included descriptive and cluster analysis is used. Two clusters were formed, in cluster 1, Parents had illiterate (Mother 96.8% & Father 48.5%). 92.5% parents had knowledge about vaccination. In cluster 2, Parents had also illiterate (Mother 96.8% % Father 64.8. The application of Health facility by the population of Lahore is better. In immunization status is not up to the target and various determinants are attached with the poor immunization status. If those determinants for vaccination were escaped, the coverage of vaccine could easily reach national targets. Access to nearby health care facility, parental educational levels, socioeconomic status, and knowledge about the vaccination can contribute to the better immunization status in Lahore.
Impact of Remittances on Economic Growth of Pakistan
(University of Management and Technology, 2018) Muhammad Moazzam Hassan
One of the major international financial resources in the world is remittances which occasionally exceeds the foreign direct investment flows in few economies of the world (Gapen et al., 2009). There had been number of research articles and debates on the economic growth sources within developed and under developed countries (Pradhan, Upadhyay & Upadhyaya, 2008; Fayissa & Nsiah, 2010). Remittances considered holding the strong influence on the growth of an economy. The purpose of this research study is to examine the influence of worker's remittances on the economic growth along with few economic indicators in Pakistan. Panel data for the time period 1971 to 2016 is taken to examine the empirical linkage between the worker's remittances and economic growth. By applying the ARDL and bound cointegration approach, the study found that there is a positive impact of remittances on the economic growth of Pakistanin the short run and long run. This study also elaborated that worker's remittances impact increases at higher levels relative to economic growth in Pakistan. Furthermore, the study concluded positive association among the FDI, labor force, capital and economic growth for both short run and long run. However, no statistically significant linkage found between economic growth and net exports in Pakistan. The study also concluded that unattractive rate, lack of proper foreign policy, transactions through freelancing business, AML/compliance, rebates on home remittances and religious factors hurdles the growth of remittances.
Corporate Governance and Earnings Management
(University of Management and Technology, 2018) Mohsin Mumtaz
The research employs fixed effects methodology to examine the impact of corporate governance on earnings management in non-financial firms of KSE 100 index within Pakistanfrom the period 2010 to 2016. Corporate governance mechanisms examined comprise board size, board meetings, audit committee independence, audit committee meetings, big 4 audit firms and managerial ownership. While earnings management is measured through discretionary accruals measured in accordance with the Modified Jones Model (1995). Results of the study indicate that larger board encourages earnings management through increased board diligence appears to have a controlling impact on profits manipulation by management. Further, we find that lower percentage of insider shareholding encourages earnings manipulation. This could stem from the overriding influence of larger block holders and institutional shareholders on the smaller shareholders for the achievement of short term profits by firm leading to earnings management. While more independent members on audit committees encourage earnings manipulation which is in line with the findings related to board size. We also find that more the board members meet, would reduce the earnings management practices. It suggests that board and audit committee members may encourage earnings manipulation from the need to protect their credibility and reputations in the markets by showing robust earnings and firm performance. This is the first study that provides glimpse of the impacts of corporate governance changes in response to the 2012 SECP Code of Corporate Governance, and we contend based our findings that there is a need for tougher legislation, and more elaborate measures with which to assess corporate governance performance within firms.
Financial risks in banking sector of Pakistan
(University of Management and Technology Lahore, 2017) Muaaz Ahmad, Hafiz
Banking industry plays a vital role in economic performance of every country. Banks used to generate its profit by taking loans from one party with the lower interest rates and lend it to the other party with the higher interest rates, the difference between these interest rates are basically the profit of banks but this process of generating income is not as smooth as it looks like. Banks has to face lots of threats which are known as financial risks. This study covers all the financial risk which includes market risk, credit risk, liquidity risk, rate of return risk, interest rate risk and equity risk for Islamic banks and conventional banking sector prevailing in Pakistan. This comparative study investigates the different determinants of all type of risks and the level of financial risks prevailing in banking industry. Furthermore, it examines which banking sector (Islamic or Conventional) is more sensitive to the underlined risks. The aim of this study is to examine that up to what extent Pakistani banks are affected by financial risks and to compare the all financial risks that what type of risks are more harmful for Islamic banks and what type of risks are more hazardous for the conventional banks. Secondary data is being used in this study and it is collected from annual reports, SBP web site and from different articles from 2002 to 2016. Total 10 banks are being undertaken in this study as a sample in which 5 banks are Islamic and 5 are conventional. Regression model is used in this research and Descriptive Analysis, Fixed and Random Effect, Hausman Test are the techniques which has been used with the help of E-views and MS Excel. The results depict that Islamic banks are more sensitive to liquidity risk and credit risk as compare to the conventional banks. In case of market risk, both sectors are facing approximately the same level of risk. Conventional banks are more sensitive to equity risk, interest rate risk and rate of return risk.
Relationship among electricity consumption, GDP, CPI and FDI investment
(University of Management and Technology Lahore, 2017) Farhan, Ahmed
The Purpose and aim of this study is to investigate the relationship between electric power consumption, Economic Growth (GDP), Consumer Price Index (CPI) and Foreign Direct Investment (FDI) in ‘Pakistan and BRIC countries’, by applying Cointegration technique’ for the period 1990-2015. Johnsen Cointegration for long- run and Vector Error Correction Model for a short-run relationship have been applied to find out the relationship of the variables mentioned above. ‘Granger Causality test’ is also applied to find any cause among variables of this study. The results observed and obtained from tests of cointegration settle that different countries depict different relationships in long-run and short-run. Although all of Pakistan, Brazil, Russia, India & China show ‘long-run relationship’ in the study. Yet, the reasons for the short-run relationship differ. For instance, in case of China; it is shown that she must practice, such policies, which increase ‘Foreign Direct Investment’ to prompt ‘Electricity consumption’. Furthermore, the findings of the study indicate that policymakers should adopt and implement policies keeping in view the country-specific ground facts and causing the behaviour of variables in this causal relationship study
Bridging nexus between the financial returns of the film industry and its determinants
(University of Management and Technolog, 2017) Waqar Hassan Randhawa
The purpose of this study is to discern the determinants of the returns of movies in its distinctive genre in context of cinematic factor and financial impact factors. We further tested the adequacy of the current return being a success story in comparison to past. A total of 900 movies sample has been chosen and stratified into equivalent number relating to the old era (1980-2006) and new era (2007-2016). The data demographically relates to the major cities of Pakistan; Lahore, Karachi, Islamabad, Rawalpindi, Peshawar & Quetta. The data is further stratified into Returns (Based upon Box office collection and Investment) and with respect to their perceived determinants, cast, direction, story & Music. We have also tested perceived Financial Determinants (Cast remuneration, variable production cost and promotional expenses). For determining the quantum of returns independent sample T statistics was applied. In order to test the significance of perceived determinants of returns of the movies OLS regression was applied. Our study indicates a surge in returns. Furthermore it reveals that cast and direction are the most significant predictors for the returns, whereas music and story has only shown partial predictability. We have established empirically that for Pakistanfilm industry the financial returns heavily bank on the financial determinants in which more prominently the cast remuneration and the direct variable cost have major to contribute.
The stock volatility and contagion effect – study from pakistan
(University of Management and Technolog, 2017) Muaaz, Muhammad
The notion of efficient market hypothesis has dominated the financial markets for a long period of time which explicitly states the prices of the securities reflect all levels of information available. This fact was pursued by many of the rational investors but in response to the global market crash, the concept of behavioral finance emerged and the patterns changed.In a decision making process, a relational financial decision maker must take into account not only returns but also the variance and volatility of returns.The primary feature of this study examine the sentiments approach and random walk theory effects on the Pakistan stock market, in addition to this, forecast the volatility of Pakistan stock exchange index by using past index values, whether such noise traders are present in the Pakistan stock exchange. Furthermore investigates the effect of the market index contagion factor, risk, return and volatility effect on Pakistan stock exchange using the GARCH estimation models. These results propose that market index and volatility have an impact and an important role in determining the dynamics on the stock returns. In this study, quantitative methods have been adopt to investigate the research hypothesis. Time series data of stock indices from 2000 to 2015 is used to conduct this research. Augmented Dickey Fuller test (ADF), Autoregressive Integrated Moving Average (ARIMA) and Generalized Autoregressive Conditional Heteroskedasticity(GARCH) are the quantitative techniques used to measure the factors affecting the Pakistan stock market volatility, moreover for contagion affect testing the correlation coefficient test and GARCH with exogenous model are engaged on US, UK and selected Asian countries. The analysis clearly shows that volatility trend is predictable on the basis of historical trend as variance equation of GARCH has significant positive impact. The analysis also revealed that leading stock exchange indices have strong impact on Pakistan stock market. The study support the argument for the international and national investors to hypothecate their strategies to minimize the risk. In addition of this strategy formulators may also change the results of these acquirements to inform the macro and micro stage policy making. Moreover this study is used to fill the gap between the volatility prediction and contagion factors which have significant impact on the capital market
Understanding sensitivity of investment to internal funds and their subsequent effect impact on firm performance in Pakistan
(University of Management and Technolog, 2017) Ihtesham, Uzma
This study intends to find the suitable model for financial constraint which suits Pakistani environment best. Through empirical evidence it is proved that SA Index works best in developing economy. On the basis of SA Index, 98 firms are financially constrained and 125 are unconstrained. the study includes KSE listed non financial firms. The time frame for the study is 10 years (2005-2014). The second aim of the study is to find the sensitivity of investment to internal funds and asset sales and the impact of financial constraints on it. Focusing on capital expenditure and income from asset sales, the study finds a negative relation between growth opportunities and asset sales. Income from asset sales is significant determinant of capital expenditure (investment) and firms invest more when funds are generated from internal sources. Lastly the study investigates that financially constrained firms perform poorly when income is generated from asset selling unlike unconstrained firms. Unconstrained firms have a positive and significant relation with performance and asset sales.
Risk managing techniques in banking industry; A case from Pakistan
(University of Management and Technolog, 2017) Kaleem Ullah Alvi
Purpose: The basic objective of this research study is to examine the risk management techniques usage in the banking industry of Pakistan to deal with various types of risks. The research study also makes a comparison among the usage of risk management practices in Islamic and Conventional banks of Pakistan. Methodology: This study has used primary sources of data. The primary data was collected through questionnaire from the senior managers, risk managers and CRO of Islamic and conventional banks. The sample size was consisting of 51 respondents from banks. The data was analyzed by using descriptive statistics, cross tabulations, t-tests, ANOVA analysis and Least Significant Difference (LSD) test. Findings: The conventional banks found to be statistically different comparative to Islamic banks in usage practices regarding stress testing results and operational risk management tools. However, the study concluded that no statistically significant difference found between the Islamic and conventional banks regarding the level of adequacy of risk management tools and systems, usage extents of market risk VaR, credit risk exposure usage, credit risk mitigation methods and credit risk portfolio analysis in Pakistan banking sector. Practical Implication/Originality: Considering the importance of risk management practices in Islamic and conventional banks; Bankers, investors, regulators, and policymakers are likely to benefit from the results of the study as a guide, when developing and reforming the existing risk management practices.
Impact of CSR on financial performance
(University of Management and Technology Lahore, 2017) Haq Nawaz
This study intends to explore the relation between the practices of Corporate Social Responsibility (CSR) and the financial performance of banks using the measure of ROA. This research helps to improve the knowledge and managerial practices. The current study uses Pakistan's banking industry as the empirical setting. The methodology of the study is based on the creation of a 32-item scale CSR disclosure index to measure CSR and then regression results are applied on the models. The results concluded that all Banks in Pakistanview CSR practices as strategic activity and are included in the annual reports of banks. Moreover, there exist significant relationship between customer related CSR and financial performance (ROA) and insignificant association between employees related CSR, stakeholders related CSR and CSR in totality and financial performance (ROA).Future research can investigate the effect of CSR on other factors like knowledge and talent management, human capital development etc. Furthermore, other developing countries can be taken in the study for the investigation of CSR.
The effect of concern about reported income on discretionary spending decisions
(University of Management and Technology Lahore, 2016) Abdul Wahid
A lot of research has been conducted in foreign countries on research and development, but in Pakistan a much research well not be conducted in the area of R&D actions through discretionary spending decision. Prior research disclosed the R&D expense through firms SFAS NO. 2 Skaife et al, (2013). In this study under the IAS 38 to highlights the firm’s manager allocate the funds for R&D investment through discretionary spending decisions to improve the firm performance, and was investigated to R&D impact of firm profitability. Researcher for this study was select the sample of 100 firms from non-financial sectors which are listed in Pakistan Stock Exchange. The researcher will use the STATA 12 and MS excel 2013 for statistical analysis. In 1st model researcher was investigated the profitability positive and significant relationship with R&D. Simultaneously R&D effecting of the company profits and growth Branch (1974). It was determine the advertising negative and significant relationship with research and development (R&D).Both advertising and R&D are contributing of the firm future growth Debruine et al, (2011).Firm age is negative and significant relationship existed with R&D. Might to be low support of fund depends upon managerial behavior Branch (1974). Labor intensity strong insignificant and negative relationship with R&D. Labor intensity positive correlated with research and development R&D Narayanan (2015). Multinational affiliation is positive and significant relationship with research and development (R&D). Researcher to check the individual relationship, the profitability and multinational affiliation positively and significant relationship with research and development (R&D). And advertising, firm age and labor intensity is negative and insignificant relationship with R&D. In model 2ndthere is strong relationship and significant between R&D and profitability. Research and development (R&D) strongly impact of profitability within group of companies Sores et al, (2014). Advertising had shown the positive and significant association with R&D. Advertising increase the firm profitability and growth Bhagwat et al, (2011). Firm age is positive and significant relationship existed between firm age and profitability. Labor intensity positive insignificant relationship with profitability. There is positive and insignificant relationship between multinational affiliation and profitability. Scholars are providing a strong evidence labor intensity increase the innovation and profitability activities Suarez et al, (1999). Researcher to check the individual relationship, R&D, firm age and multinational affiliation is positively and significant relationship with profitability. There is positive but insignificant relationship between advertising and profitability. In 3rd model Intangible asset is positive and significant relationship with profitability. Third model shown the positive relationship between intangible asset and profitability Branch (1974). Change in intangible asset is strong negative and insignificant relationship with profitability. Subsidies is an important factor to decrease the cost of capital an increase the R&D investment events. The Korean firms increase the firm productivity and research and development (R&D) expenditures through Government subsidy (Vonortas et al, 2013). Investigate the tax credit to increase the R&D expense (Reenen et al, 2000).The market structure play a vital role in industry growth. The firms in existing market structure rather than other industry structure to increase the profit in R&D investment (Mirman et al, 2003)
Effects of fiscal policy on GDP for the case of Pakistan.
(University of Management and Technology Lahore, 2014) Manal Sharif Bajwa
The Purpose of this paper is to determine the impact of the fiscal policy on GDP in Pakistanusing time series data for the period 1980-2014. Asymmetry in the fiscal policy will be explained by Direct taxes ,indirect taxes, development expenditures and current expenditures. ARDL model is used for the analysis. The outcome supports two key conclusions. Current expenditures and indirect tax do not have asymmetry in their model while development expenditure and direct tax have asymmetry in their model. So the policy makers can see the increasing and decreasing Direct taxes and development expenditures they can make sure that the effect might not be same and opposite. This study will provide help in determining the importance of fiscal policy for the development of Pakistan.
Role of cash flow sensitivity and managerial discretion in the investment decisions: evidence from an emerging market
(University of Management and Technology Lahore, 2016) Ahmed, Rehan
This research aims to investigatehow a firm’s decision in favor of, or against, financing new positive NPV projects, depends on the availability of internalcash flows and to what extent they are dependent on the discretion of managers making investment decision. For a given firm, cash flow shocks result in expectations formation about future cash flows. If a firm experiences a positive cash flow shock, it is more likely for the said firm to positively change its expectations about future cash flows. In case of a negative cash flow shock, the firm is likely to expect more negative cash flows in future. The availability of finance, literature tells us, is not merely a function of supply but rather it is the cost on which a firm is able to obtain financing. In case of firms working in Pakistan, a majority of firms should face, in this regard, a financial constraint weakening their ability to extend their operations or start new projects. This constraint may emerge from the fact that compared to developed economies such as United States, the market is highly characterized by information asymmetries. On the other hand, the agency theory states that agents often make those decisions that do not necessarily reflect the interests of the principals. Tthis should also be true for the investment decisions. This research aims toinvestigate on which of the above two factors does the investment decisions depend or whether both of these factors can be thought of as a collective force that determines where and when the investments are made.
Risk and return profile using icapm Evidence by ff3 portfolios on kse 100-index
(University of Management and Technology Lahore, 2016) Rauf, Muhammad Asad
This paper analyzes the ICAPM multifactor models, tested over 6 portfolios sorted on size and book-to-market of KSE 100 Index. Companies are included in the study for the calendar year 2010 to 2014 that are listed in KSE 100 index. The Company should have regular price record at the end of every year and should provide accounting data publicly available for June of every year to be selected in sample.For state variables, used macroeconomic variables (Dividend yield, and term spread), Data used from the 3-monthTreasury bill, and 1-yearTreasury bill for term spread. The term spread and dividend yield are usedascontrolvariables. Thetermspreadiscalculatedasthedifferencebetweenthe yields on the1-yearTreasury bill andthe3-monthTreasurybill. The empirical result of ICAPM in individual portfolio is according to size and book to market. Market risk premium has insignificant effect on BL, BM and BH portfolios. But the market risk premium has significant effect in SM, SL and SH portfolios. The intercept of all of the six portfolios has significant value. The invention and state variable of investment opportunity of dividend yield has insignificant effect in two of the portfolios from all of the six portfolios. The term spread capture the variations in the level of slope yield curve, the term spread is insignificant in one portfolio SH out of six portfolio hence remaining five SL, SM, BL, BH, BM is significant. We can say that the dividend yield has effect on the business risk of the firm. The small firms have more tendency to be elastic in such business risk because of its fast financial flexibility. Term spread is considered as one of the essential parts of the investment opportunity set as the invention and improvement in term spread and risk free rate are closely related to business cycle. Due to cash flow constraints and high financial leverage in small firms, there is less chance of their survival during bad economic condition (Viale, 2009). Afterward, the small firms represent more sensitivity to the news about the business cycle stage. As a result, investor demanded a premium when they investin small firms. The large firms have high capability to handle the financial and business risk. So, if we consider only the size factor, it represents that the large firms are comparatively less affected by the invention and changes in term and risk free rate.
The Impact of Credit Rating on Firm Performance and Stock Return; Evidence from Pakistan
(University of Management and Technology Lahore, 2016) Abbas, Muhammad Ahmad
The respective study focus on three aspects; factors determining credit rating, the impact of CR on act of firm & the relation between return of stocks and credit rating. The study focuses on the firms listed in Karachi Stock Exchange (KSE) of Pakistan. The empirical analysis uses the data of 49 firms rated by Pakistan Credit Rating Agency (PACRA) for the time period of 6 years, 2009-2014. Two estimation techniques have been applied, Ordered Probit Model and Panel data Regression. Our findings illustrate credit ratings are predicted by important firm specific factors (size, growth opportunities and capital intensity, asset returns, sector type). Moreover, it is suggested further that firm with higher credit rating tend to have better performance (measured byTobin’s Q& ROA) of listed firms. Likewise, higher rated firms tend to achieve higher returns on their stocks.
Dynamism in financing decision patterns: A life cycle approach
(University of Management and Technology Lahore, 2016) Anis, Sumera
This empirical study is conducted to analyse the dynamics of financing decisions for Pakistani non-financial firms. The approach to investigate the problem is life cycle approach incorporating dynamic panel data methodology. Three life cycle stages; growth, maturity and decline are selected for analysis. The basic criteria for samples are information about IPOs. Five hypotheses are postulated for the study which is about life cycle impact, reverse of life cycle impact, reputational effect, in search for reputational effect and pecking order theory. Hypotheses H1a & H1b state that in the beginning firms use more equity finance and then gradually rebalance this with debt. In hypotheses H2a & H2b reverse of H1a & H1b are analysed. In hypothesis H3, as pecking order theory predicts, importance of profitability is considered and utilization of internal finance against debt and equity is studied. Results illustrate that the impact of life cycle theory, reputational effect and pecking order theory are present for Pakistani firms. In the growth stage firms mostly rely upon equity finance and after getting maturity they augment use of debt financing. Pecking order theory is confirmed too.

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