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The moderating role of firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan

Investment management & financial innovations, 2020-12, Vol.17 (4), p.341-355 [Peer Reviewed Journal]

Dec 2020. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 1810-4967 ;EISSN: 1812-9358 ;DOI: 10.21511/imfi.17(4).2020.29

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  • Title:
    The moderating role of firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan
  • Author: Hussain, Sarfraz ; Quddus, Abdul ; Phat Tien, Pham ; Rafiq, Muhammad ; Pavelková, Drahomíra
  • Subjects: Capital structure ; Current liabilities ; exchange rate ; Interest rates ; liquidity ; Non-Debt Tax Shield ; profitability ; tangibility
  • Is Part Of: Investment management & financial innovations, 2020-12, Vol.17 (4), p.341-355
  • Description: The selection of financing is a top priority for businesses, particularly in short- and long-term investment decisions. Mixing debt and equity leads to decisions on the financial structure for businesses. This research analyzes the moderate position of company size and the interest rate in the capital structure over six years (2013–2018) for 29 listed Pakistani enterprises operating in the sugar market. This research employed static panel analysis and dynamic panel analysis on linear and nonlinear regression methods. The capital structure included debt to capital ratio, non-current liabilities, plus current liabilities to capital as a dependent variable. Independent variables were profitability, firm size, tangibility, Non-Debt Tax Shield, liquidity, and macroeconomic variables were exchange rates and interest rates. The investigation reported that profitability, firm size, and Non-Debt Tax Shield were significant and negative, while tangibility and interest rates significantly and positively affected debt to capital ratio. This means the sugar sector has greater financial leverage to manage the funding obligations for the better performance of firms. Therefore, the outcomes revealed that the moderators have an important influence on capital structure.
  • Publisher: Sumy: Business Perspectives Ltd
  • Language: English
  • Identifier: ISSN: 1810-4967
    EISSN: 1812-9358
    DOI: 10.21511/imfi.17(4).2020.29
  • Source: ProQuest Central
    DOAJ Directory of Open Access Journals
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