Investigating the leverage composition of MNCs and DCs of Pakistan through their determinants
Loading...
Date
2014
Authors
Farah Yasser
Journal Title
Journal ISSN
Volume Title
Publisher
University of Management and Technology
Abstract
Purpose – This study seeks to investigate the leverage composition of MNCs and DCs in Pakistan through their determinants
Design/methodology/approach – Fixed effect regression is used to show the relationship of determinants of capital structure on leverage for MNCs and DCs listed on Karachi Stock Exchange (KSE) for the period of 2006 to 2011.
Findings – The results suggest that agency cost, non debt tax shield and business risk are not significant determinants of capital structure for all types of samples i.e. all firms, DCs and MNCs. Bankruptcy cost is a significant determinant of capital structure for MNCs and otherwise in cases of all firms and DCs. On the other hand, size, growth, free cash flows and collateral value of assets are significant determinants for all firms and DCs and not for MNCs. Furthermore, age and foreign exchange risk are significant determinants for all firms, DCs and MNCs.
Originality/Value – This is the first study to investigate the leverage composition of MNCs and DCs of Pakistan and results suggest MNCs hold more debt in their capital structure than DCs.
Key words: Leverage, Determinants of Capital Structure, Domestic Corporations (DCs) and Multinational Corporations (MNCs).
Description
Keywords
MS Thesis, Finance