Relationship Between Capital Structure and Ownership Structure: a Comparative Study of Textile and Non Textile Manufacturing Firms

In: Business and Management

Submitted By Muhammadarslan73
Words 7578
Pages 31
Public Policy and Administration Research ISSN 2224-5731(Paper) ISSN 2225-0972(Online) Vol.4, No.11, 2014

Relationship between Capital Structure and Ownership Structure: A Comparative Study of Textile and Non Textile Manufacturing Firms
Muhammad Arslan* M.Phil (Management Sciences) Bahria University Islamabad, Pakistan, PO box 44000, E-8, Islamabad, Pakistan Email: Rashid Zaman M.Phil (Management Sciences), Bahria University Islamabad, Pakistan Email: Abstract The current study explores the impact of ownership structure on capital structure in textile sector and rest of the manufacturing sectors (non-textile) in Pakistan using regression analysis with fixed effect model. As textile sector is the largest manufacturing sector in Pakistan and having diversified financial characteristics, however, there exists a gap whether textile sector’s ownership and capital structure relationship matches with other manufacturing sectors or not. Current study tries to fill this gap. The results indicate that in textile sector, no significant relationship exists between ownership concentration and capital structure whereas a significant negative relationship is found between these two variables in case of non-textile firms in Pakistan. However, institutional ownership variable was found to be non-significant in both textile and non-textile sectors. Other control variables were found to have the results as hypothesized. Period of study used in this study is 2006-2009 and sample comprises of KSE listed firms. Keywords: Ownership concentration, capital structure, institutional shareholding. INTRODUCTION The capital structure refers to the optimal mix of debt and equity financing structure used by a firm to support its financing needs. Literature supports the notion that an optimal capital structure can have a positive…...

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