Capital structure and profitability of firms in the
Heman D. Lohano and Sana Tauseef
corporate sector of Pakistan
First published: 26 February 2018
We examine the impact of debt ratios on returns on equity based on panel data for 179 companies from the non-financial corporate sector of Pakistan for the years 2000 to 2015. The least squares fixed effects estimator reveals that the debt ratio has a significant positive effect on return on equity up to an optimal debt level of 40 percent beyond which it has a significant negative effect.
Keywords: Panel data, Debt financing, Profitability, Pakistan, Non-financial firms.>> Full Article