CAPITAL STRUCTURE DETERMINANTS: AN EMPIRICAL STUDY OF FOOD & PERSONAL CARE INDUSTRY OF PAKISTAN

Pervez Ahmed Memon Sukkur Institute of Business Administration Abdul Khaliq Sukkur Institute of Business Administration Salma Akbar Sukkur Institute of Business Administration Ghulam Abbas Sukkur Institute of Business Administration

ABSTRACT
This paper is an attempt to determine the capital structure of listed firms in the Food & Personal Care Industry of Pakistan. The study covers the sample of 16 firms in the sector, listed at the Karachi Stock Exchange, for the period 2001-2008 and analyzed the data by using pooled regression adjusted with cross sectional variation .Six variables i.e. firm size tangibility of assets, profitability ,growth, tax rate and earning volatility were tested as determinants of the leverage. The regression model is found to be significant and these six variables determine 89% of leverage .Only two variables- growth and size of firms were found significant and have positive relationship with leverage. So, capital structure of firms in F&PC industry mainly depends upon their sizes and growth opportunities. The paper is divided into five parts- Introduction and Literature Review, Objectives of Study, Data & Methodology, Results and Discussion, and Conclusion.

Keywords: Capital Structure, Food and Personal Care, Pakistan

INTRODUCTION AND LITERATURE REVIEW

Firms require capital to expand or support their sales. Two major sources of financing that are available to firms are debt and equity. Firms can use any of these two sources to finance their operations. They usually use mix of both debt and equity. The mixture of debt and equity is called capital structure. Financial managers are concerned with the level of debt and equity. They would like to have optimal capital structure; where the firms value is maximized and cost of capital is minimized. The level of debt used varies across the industries and firms. The factors that are considered by the firms while making capital structure decisions are: sales stability, asset structure, growth rates, taxes, profitability, control issues, market conditions, non debt tax shields, and lenders and rating agencies attitude etc. Lot of research studies have been conducted on the issue of capital structure. The first scientific study conducted in the field of capital structure is of Franco Modigliani and Merton Miller (1958). In their study, on the basis of certain unrealistic assumptions like zero taxes, they concluded that a firms value is unaffected by the level of debt used. In their second article in 1963, MM considered the corporate taxes and concluded that due to tax deductibility of interest; the use of debt increases the value of the firm. So the firms can use 100% debt.

This article ignored the cost of bankruptcy. At higher level of debt the chances of bankruptcy increase. Trade-off theory (Scott, 1977) suggests that the firms want to trade-off the benefits of debt with the expected cost of bankruptcy. Firms optimal debt ratio is one where the tax advantage of borrowing is equal to the expected cost of bankruptcy. Higher the profitability the lower the expected costs of distress and higher the tax benefit of using leverage. The cost of financial distress is also determined by the type of assets used. Pecking Order Theory, Myers and Majluf (1984), states that capital structure is driven by firm's desire to finance new investments, first internally, then with low-risk debt, and finally if all fails, with equity. Therefore, the firms prefer internal financing to external financing.

After the contributions made by the MM in the area of capital structure; there have been lot of empirical studies conducted to understand the determinants of capital structure. Worth mentioning are Rajan Zingles (1995), Bradley, Jarrell and Kim (1984), Alderson & Betker

(1995), Titman & Wessels (1988), Wiwattanakantang (1999), Jordan, Lowe, Taylor (1998), Hussain (1997), Barclay, M.J., Smith C.W. and Watts, R.L. (1995), Booth et al (2001), and Fama, E and French, K.R. (1998), Harris and Raviv (1991) Bevan, A. and Danbolt, J., 2000, and Wolfgang Drobetz and Roger Fix ( 2003)

Rajan and Zingles (1995) in their study used four determinants (independent variables); tangibility, sales, market to book ratio, and profitability. They found all variables significant. Rajan and Zingles in that study found tangibility and sales to be positively related and market to book ratio and profitability to be negatively correlated with debt.

Wolfgang Drobetz and Roger Fix (2003) in their study used six variables: tangibility of assets, firm size, the market-to-book ratio, profitability, volatility, uniqueness of the product and non-debt tax shields. They found tangibility and size positively correlated with leverage and profitability and growth negatively correlated with leverage. Bradley, Jarrell and Kim (1984) found that earning volatility, investment on R&D and advertising are negatively related to leverage and significant. They also found that the non debt tax shield is positively related with leverage; which is inconsistent with the theory. They found that industry classification is also relevant in capital structure decisions.

So far as the determinants of capital structure in Pakistani firms are concerned; several empirical studies have been conducted. Some of them which are known to us are Shah, Atta, and Hijazi (2004), Hijazi, Yasir (2006), Attaullah shah, safiullah khan (2007), and Jasir ilyas (200X). Shah Atta, and Hijazi (2004) conducted the empirical study on determinants of capital structure of stock exchange listed non financial firms of Pakistan. They used tangibility, size, growth and profitability as the independent variables. They found that tangibility and size are positively correlated; and profitability and growth are negatively correlated with the leverage.

Yasir and Hijazi (2006) conducted the empirical study on the determinants of capital structure in cement industry of Pakistan. Following the Rajan, Zingles (1995) they used four independent variables of size, tangibility, growth, and profitability. They found growth, and tangibility to be negatively correlated with debt. Profitability and size were found to be

negatively correlated with debt (leverage).

Attaullah Shah, Safiullah Khan (2007), conducted another empirical study on determinants of capital structure of the Karachi Stock Exchange listed non financial firms. In this study they used six independent variables. They were tangibility, size, growth, earning volatility, non debt tax shield, and profitability. They found that Tangibility is significantly related to debt. Size, measured by natural log of sale, has a positive correlation with leverage but is insignificant. Growth variable was found to be negatively correlated with and significant at 10% level. Profitability was found to be the most significant explanatory variable and negatively related to leverage. The impact of earning volatility on debt was found insignificant. There is limited number of research articles in area of capital structure for Pakistani market/firms. As mentioned there are some studies for non financial firms as whole but we are lacking in sector wise studies.

1.1 Objectives of The Study The objective of our study is to identify the determinants of capital structure in Food& Personal care industry of Pakistan. We have used seven variables: Size of the firm, tangibility of assets, Profitability, tax rates, Earning volatility, Non debt tax shield (depreciation), and Growth of the firm. 1.2 Hypothesis of the Study The hypotheses of our study are: 1 2 3 4 5 6 H1: A firm with higher profitability/ return is expected to have lower debt ratio.

H2: A firm with large size will have higher debt ratio. H3: A firm with higher percentage of fixed assets will have higher debt ratio. H4: A firm with higher growth is expected to have higher debt ratio. H5: A firm with higher taxes will have higher debt ratio H6: A firm with high income variation will have lower debt.

2. DATA AND METHODOLOGY

Most of the research in the field of finance suggests that ratio of debt and equity vary

from industry to industry and it is because of certain characteristics of different industries. This study is based on the secondary data, extracted from the Balance Sheet Analysis, a document annually published by the State Bank of Pakistan from 2000-2008. The sample consists of 16 firms from food and personal care products industry listed on Karachi Stock Exchange. The firms having incomplete information are excluded from the sample. Simple regression model has been run to uncover the firms financing behavior in this industry and 126 firm year observations have been used in this analysis. Moreover, the problem of multicollinearity has been addressed in this study which was not discussed so far in the existing literature as per researchers knowledge.

3. DETERMINANTS OF CAPITAL STRUCTURE

For continuing its operations every Business enterprise whether big, medium or small needs some capital or financial resources. These financial resources could be owned resources or in form of debt which organization borrows from creditors. Capital structure of any firm depends upon its specific characteristics (discussed later in the document) as well as on the cost and benefit analysis of debt and equity.

Previous studies of capital structure indicate a strong dependence of debt ratio on the nature of the concerned industry. Furthermore, the determinants and variables of capital structure can be categorized into dependent and independent determinants (variables). Leverage, a dependant variable deals with debt and equity. Whereas the size of the firm, profitability, tangibility, volatility, tax and non-debt tax shield are the independent variables.

3.1 Dependent and Independent Variables The previously discussed dependent and independent variables, the most crucial factors for determining the capital structure of any firm, are elaborated further in the following discussion. i) Measure of Leverage

The widely known fact of profit maximization in corporate finance puts responsibility on the finance manager of every business organization to make efforts for stockholder wealth

maximization. By achieving this goal, an efficient manager can effectively maximize the value of the firm. Only after encountering a series of tough spots and quick decision making, a manager can turn this goal into reality. None of the organization has all of the resources to carry on its operations .It has to rely on a mix of debt and equity, often referred to as leverage in literature, for this purpose. An optimal level of leverage is determined by the tradeoff between the costs and benefits of debt and equity financing. The prime benefit of leverage is the saved cash generated because of the debt-tax shield. ii) Size

Two contradictory theories exist in literatures that relate firm size to its leverage. Many researcher, for example Rajan and Zingales (1995), Huang and Song (2002), and Friend and Lang (1988) and theories try to draw the picture of this relation; bankruptcy cost theory is one of them and all of these depict that there is a positive relation between the capital structure and size of a firm. The large firms are more diversified (Remmers and others 1974), have easy access to the capital market, receive higher credit ratings for debt issues, and pay lower interest rate on debt capital (Pinches and Mingo 1973). Further, larger firms are less inclined to bankruptcy (Titman and Wessels 1988) and this implies the less probability of bankruptcy and lower bankruptcy costs. On the other hand research claims that firm size and leverage are negatively related. (Kester, 1986), (Titman Wessels,1988) and (Kim Sorensen, 1986) . iii) Growth opportunities

Different researchers have used different tools for measuring growth opportunities. Our scale for measurement of growth is percentage increase in total assets. There are also two different approaches to analyze the relationship between growth opportunities and leverage. One theory suggest that firms having high growth opportunities tend to have less leverage because they have stronger incentives to avoid under- investment and asset substitution that can arise from stockholder-bondholder agency conflicts (Drobetz and Fix 2003). What causes the firms with more growth opportunities to be less intended towards external financing? The reason behind this phenomenon is a generally accepted perception that the firms having enough resources to meet their operation have no logical grounds to borrow from creditors. In other words, firms with high growth opportunities tend to keep their debt ratios at low levels. This attitude also preserves their credit capacity for difficult times.

But the other side of picture represents another perception which states that a higher growth rate implies a higher demand for funds, and, ceteris paribus, a greater reliance on external financing through the preferred source of debt.

iv)

Profitability

Profitable firms face less risk as compared to less profitable ones. So as per the previous studies and theories on capital structure there is a relation between firms profitability and leverage. Research suggests that there are two totally different points of view regarding this relationship. Some studies specify a positive relation and emphasize on perception that firm having enough internal funds prefer internal financing rather than external debt financing because debt financing consist of some risk factor. If the internal funds are not enough to fulfill financial requirements of the firm, it prefers debt financing to equity financing (Myers 1984). Hence highly profitable firm relies on internal financing than external debt financing. Contradictorily, research work of Titman and Wessels (1988), Kester (1986), Friend and Hasbrouck (1988), Friend and Lang (1988), Gonedes and others (1988) show the negative relation between the level of debt in capital structure and profitability. In our study profitability is calculated by dividing net income by total sales.

v)

Tangibility

The process of borrowing also imposes some limitations, putting assets as collateral is one of them. Likewise, in case of business borrowing, firms with higher fixed assets have higher choices of debt financing, and hence they are more oriented towards committing their assets. This ratio of higher fixed assets serves creditors as guarantee of repayment.

When we take into account the relationship between tangibility and leverage two viewpoints prevail. One school of thought claims that there is a direct relation between leverage and tangibility. An increase in assets of the firm results in an increase in debt financing. Other

set of opinions drives another relation which claims that tangibility and leverage are negatively related. Those firms with fewer fixed assets are more likely to depend upon external financing.

We have calculated tangibility with the division of fixed assets by total assets.

vi)

Tax

The empirical analysis on determinates of capital structure has also shed some light on the impact of tax on corporate capital structure. Trade-off theory says that organization with higher tax rate should use more debt in order to get benefit from it. Conversely, some researchers are also of reverse attitude regarding tax impact on debt ratio. For example Fama and French (1998) declare that debt has no net tax benefits. As MacKie-Mason (1990, p. 1471) claims: Nearly everyone believes taxes must be important to financing decision, but little support has been found in empirical analysis.

vii)

Volatility

Business without risk is unheard of; however, this inherited amount of risk increases many folds when a firm incurs a very high ratio of debt. Any unexpected change in earnings can drastically affect a companys financial security. Pecking order theory estimates a negative

relation between leverage and volatility of earnings. Same relationship between leverage and volatility is found by (Bradley et al., 1984) and (Titman Wessels, 1988). On the other hand agency cost theory and (Kim Sorensen, 1986), (Huang Song, 2002) herald a positive relation between leverage and earning volatility.

ECONOMETRIC MODEL
Pooled regression analysis, Constant Coefficient Model, is employed to regress the leverage on those theoretical tentative factors, ignoring the time and cross-sectional influences. The cross section company data and time series data are pooled together in a single column assuming that there is no significant cross section or inter temporal effects. Therefore the equation for our regression model will be: LG = 0 + 1 (R) + 2 (GT) + 3 (SZ) + 4 (TX) + 5 (TG) + 6 (V) + e Where LG = Leverage R= Return on Assets

GT = Growth SZ = Firm Size TX= Tax TG = Tangibility of assets V= Earnings Volatility e = the error term

4.1 Regression Model Results Table presents the results of pooled regression analysis, in which GLS method is employed to eliminate the heteroscedasticity due to panel data. The model explains almost 87% of variation in leverage, with significant F-statistic. So, this means that choice of capital structure is mainly defined by these six variables, more definitely by two variable- growth and size. Table 2 shows the results of hypothesis that we tested, only two variables- size and growth, of six proposed variables statistically define the leverage. Both size and growth have significant positive relationship with leverage. Results are in favor of second and fourth hypothesis, could not support first, third, fifth and sixth hypothesis. Table1. Regression Model results Variable C RETURN GROWTH SIZE TAX TANGIB EARNVOLITILITY
Coefficient

Std. Error 0.845664 0.161472 0.044157 0.039582 0.049331 0.151381 5.58E-10

t-Statistic -1.870352 -1.161962 2.525921 2.674706 -0.233396 -1.410527 -0.326237

Prob. 0.0644 0.2480 0.0131 0.0088 0.8159 0.1615 0.7449

-1.581688 -0.187624 0.111536 0.105871 -0.011514 -0.213526 -1.82E-10

Weighted Statistics R-squared 0.897079 Mean dependent var 0.690499

Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic)

0.867970 0.117791 30.81785 0.000000

S.D. dependent var Sum squared resid Durbin-Watson stat

0.324171 1.373594 1.559175

Unweighted Statistics R-squared Sum squared resid 0.787267 1.542104 Mean dependent var Durbin-Watson stat 0.551383 1.450217

Table 2. Expected and Observed Relationship Expected Determinant Measure (proxy) relationship with leverage Size Return Tangibility Log of Sales NI/Total Assets Total Gross Fixed Assets/Total Assets Growth Annual Percentage Change in Total Assets. Tax Earning Volatility
1-

Observed relationship

Positive Negative Positive

Positive1 Negative Negative

Positive

Positive1

Tax rate Deviation from mean

Negative Negative

Negative Negative

significant at 1% level.

4.2 Multicollinearity To check for presence of multicollinearity between explanatory variables, spearmans correlation between them is given below in Table 3. The highest correlation is positive 60% between size and return, second highest is negative 44% between tax and tangibility.

Table 3. Correlation Matrix of Independent Variables

LEVERAGE LEVERAGE GROWTH TANGIB TAX RETURN SIZE GROWTH TANGIB TAX RETURN SIZE

1.000000 0.007831 0.493243 -0.302071 -0.304575 -0.097219

0.007831 1.000000 0.121400 -0.092510 -0.005689 0.124112

0.493243 0.121400 1.000000 -0.441886 -0.417643 -0.205740

-0.302071 -0.092510 -0.441886 1.000000 -0.050489 0.072001

-0.304575 -0.005689 -0.417643 -0.050489 1.000000 0.611832

-0.097219 0.124112 -0.205740 0.072001 0.611832 1.000000

4.3 Discussion Profitability/return is negatively correlated with leverage (1 =-0.187624; Table 1) but it is statistically insignificant. The results are not only in favor our hypothesis but also reject any significant relationship between leverage and profitability. However the negative direction favors our hypothesis but it is not precise. This suggests that leverage does not depend upon profitability of firm. The growth of firms is positively correlated with leverage(2 =0.111; Table 1).This suggests that growing firms in the Pakistani Food and Personal care industry use more debt than equity to finance the new projects. One possible reason for this is: in order to grow in the sector, huge cash flows are needed, which a growing firm may not be able to meet through internal sources only and therefore they have to rely on debt. This confirms our earlier hypothesis about growth opportunities. On the other hand Shah and Hijazi (2005) found a negative relationship. The size of the firms is positively correlated with leverage (3 =-0.10; Table 1). The sign of the coefficient confirms the direction of our relationship of size with the degree of indebtedness i.e. leverage. The results of the Food and Personal Care Industry confirms The static Trade off approach supported by Shah and Hijazi (2005), Friend and Lang( 1988), Titman and Wessels (1988), Pinches and Mingo ( 1973) that larger the firms; lesser the chance of their bankruptcies, higher their credit rating, lesser they cost of borrowing and ultimately higher their leverage ratio. The results are not consistent with Pecking Order Theory as supported by Rajan and Zingales (1995) view of less asymmetric information about large firms suggesting that new equity issues will not be underpriced and thus large firms will issue more equity.

The tax rate of firms is not statistically associated with leverage. However the sign is negative ( 4 =-0.011; Table 1).The results supports the results of Fama and French (1998) that

debt has no net tax benefits, and rejects Trade-off theory that supports that organization with higher tax rate should use more debt in order to get benefit from it. Firms in food and personal care industry are leveraged irrespective of how much tax they pay, they dont consider tax advantage of debt. Asset tangibility is negatively correlated with leverage (5 =-0.2; Table 1) but it is not significant. The results thus does not favor the Mecklings (1976) and Myers (1977) version of the trade-off theory that debt le vel should increase with more fixed tangible assets on the balance sheet. Therefore we cannot accept our hypothesis that higher the tangibility the higher the leverage. Earning volatility is negatively correlated with leverage (Table 3.3) but it is not significant. So results do not support both the Pecking order theory and (Bradley et al., 1984) and (Titman Wessels, 1988) that verified the negative relation between leverage and volatility of earnings and agency cost theory and (Kim Sorensen, 1986), (Huang Song, 2002) that verified positive relation between leverage and earning volatility.

CONCLUSION
Through this study, we analyzed a sample of 16 firms in the F&PC industry of Pakistan by using a pooled regression model to measure the determinants of capital structure of the firms in this sector. We find that only two characteristics- size and growth opportunities determine the capital structure of this sector. Bo th have positive relationship with leverage. The results support the Static Tradeoff Theory, which expects a positive relationship between firm size and leverage. In F&PC industry, large firms tend to finance by more debt than smaller firms do. Growth in assets is financed by debt with increasing rate. One of leading explanation for this phenomenon is that the more growth, the more cash flows needed which cannot be fulfilled by internal equity so firms borrow. Whereas, the profitability, tangibility, tax rate and earning volatility has not significant impact on leverage. On average but imprecise, these variables have negative impact on the leverage.

REFERENCES
Alderson, Michael J. and Brian L. Betker, (1995), Liquidation costs and capital structure, Journal of Financial Economics 39 (September), 45-69

Barclay, M.J., Smith, C.W., Watts, R.L. (1995), The Determinants of Corporate Leverage and Dividend policies, Review of Financial Studies, 8, p. 709-742.

Bevan, A. and Danbolt, J., 2000, Capital Structure & its Determinants in the United Kingdom: A Decompositional Analysis SSRN Working Paper Series,

http://papers.ssrn.com/sol3/papers.cfm?abstract_id = 233550 (Published by the Department of Accounting & Finance, University of Glasgow. ISBN 0 85261 632 5).

Booth, L., V. Aivazian, A. Demirguc-Kunt and V. Maksimovic, (2001), Capital structure in developing countries, Journal of Finance, 56(1), 87-130

Bradley, M., G. Jarrell, and E.H. Kim, (1984), "On the Existence of an Optimal Capital Structure: Theory and Evidence," Journal of Finance 39 (July), pp. 857-878.

Bradley, M., Jarrell, G., Kim, E. H. (1984), On the Existence of an Optimal Capital Structure: Theory and Evidence. Journal of Finance, 39, pp. 857-878.

Chaplinsky, S., Niehaus, G. (1993), Do Inside Ownership and Leverage Share Common Determinants? Quarterly Journal of Business and Economics, 32, pp. 51-65.

Drobetz, W. and R. Fix (2003), What are the Determinants of the Capital Structure? Some Evidence for Switzerland. University of Basel, WWZ/Departament of Finance, Working Paper No. 4/03.

Fama, E. F. and K. R. French (1998), "Value Versus Growth: The International Evidence", Journal of Finance, 53, 1975-1999

Fama, E. F. and K.R. French (1998), Value versus growth: the international evidence, Journal of Finance, 53, 1975-1979.

Friend, I. and Lang, L.H.P. (1988). An Empirical Test of the Impact of Managerial Self interest on Corporate Capital Structure, Journal of Finance, 47, 271-281.

Friend, I., Hasbrouck, J. (1988), Determinants of Capital Structure, in Chen, A., ed., Research in Finance, 7. New York: JAI Press Inc., pp. 1-19.

Gonedes, N. J., Lang, L., Chikaonda, M. (1988), Empirical Results on Managerial Incentives and Capital Structure, Philadelphia, University of Pennsylvania, The Wharton School, Working Paper.

Harris, M. and A. Raviv, (1991), The theory of capital structure, Journal of Finance, 46(1), 297-355

Hijazi. S and Y. B.Tariq, (2006), Determinants of Capital of Structure: A case for Pakistani cement Industry The Lahore Journal of Economics, 11:1, pp 63-80

Huang G., Song F.M. (2006), The determinants of capital structure: Evidence from China, China Economic Review, 17 (1), pp. 14-36

Huang, S. G., Song, F. M. (2002), The Determinants of Capital Structure: Evidence from China, Hong Kong Institute of Economics and Business Strategy, Working Paper No. 1042.

Hussain, Q., (1997), The determinants of capital structure: A panel study of Korea and Jordan, J., J. Lowe and P. Taylor (1998), "Strategy and Financial Policy in UK Small

Kester, C. W. (1986), Capital and Ownership Structure: A Comparison of United States and Japanese Manufacturing Corporations. Financial Management, pp. 5-16.

Kim, W., and Sorensen, E., (1986), Evidence on the impact of the agency costs of debt on corporate debt policy, Journal of Financial and Quantitative Analysis 21, June, 131-144.

MacKie-Mason, J. K. (1990), Do Taxes Affect Corporate Financing Decisions? Journal of Finance, 45, pp. 1471-1493.

Malaysia, In Kowalski, T. (ed.), Financial Reform In Emerging Market Economies: Quantitative and Institutional Issues, Poznan: Akademia Ekonomiczna w Poznaniu, 209-228

Modigliani, F and M.H. Miller, (1958), The cost of capital, corporation finance and the theory of investment, American Economic Review, 48 (3), 261-297

Modigliani, F and M.H. Miller, (1963), Corporate income, taxes and the cost of capital: A correction, American Economic Review, 53 (3), 433-443.

Myers, S., and N. Majluf. (1984). Corporate Financing and Investment Decisions when Firms have Information that Investors do not have. Journal of Financial Economics 13, 187-221.

Myers, Stewart C., (1984), "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Mana gement No 4/03.

Rajan, R.G. and L. Zingales, (1995), What do we know about capital structure? Some evidence from international data, Journal of Finance, 50 (5), 1421-1460

Remmers, Lee, Arthur Stonehill, Richard Wright, and Theo Beekhuisen, (1974), Ind ustry and size as debt ratio determinants in manufacturing internationally, Financial Management (Summer), 24-32.

Scott, J.H. (1977), Bankruptcy, Secured Debt and Optimal Capital Structure, Journal of finance, Vol. 32, pp. 1-19.

Shah, A. and S. T. Hijazi (2004), Determinants of Capital Structure in Pakistanis Listed NonFinancial Firms Pakistan Development Review, 42(4), Pp605-618

Shah, Atta, and Hijazi S., 2005, The Determinants of Capital Structure in Pakistani Listed NonFinancial Firms, presented at 20th AGM & Conference of Pak Society of Development Economics (Jan. 11, 2005).

Tariq, B. Yasir, and Hijazi S. (2006), Determinants of Capital Structure: A Case for Pakistani Cement Industry, The Lahore Journal of Economics, 11(1): 63-80 .

Titman, S. and R. Wessels, (1988), The determinants of capital structure choice, Journal of Finance, 43 (1), 1-19.

Titman. S and Wessels. R. (1988), The Determinants of Capital Structure Choice, The Journal of Finance, Vol. 43, No. 1. pp. 1-19.

Wiwattanakantang, Y. (1999), An empirical study on the determinants of the capital structure of Thai firms, Pacific-Basin Finance Journal, 7 (3-4), 371-403.

Wolfgang Drobetz and Roger Fix (2003), What are the Determinants of the Capital Structure? Some evidence from Switzerland, Department of Finance, working paper

Balance Sheet Analysis of Joint Stock Companies Listed on The Karachi Stock Exchange Volume II (2001), State Bank of Bank of Pakistan.