Determinants of Capital Structure: Evidence from Securities Companies


  • Tahmeena Bibi PhD Scholar, Department of Commerce, Bahauddin Zakariya University, Multan, Pakistan Author
  • Prof. Dr. Muhammad Hanif Akhtar Professor and Director, Meezan Centre for Islamic Finance (MCIF), Bahauddin Zakariya University, Multan, Pakistan Author



Capital structure, Securities companies, Trade-off theory (TOT), Pecking order theory (POT), Pakistan


The objective of the paper is to explore the factors that tend to affect the debt-equity choice of securities companies in Pakistan. Data on the variables used in the study was extracted from income statements and balance sheets of various securities companies registered with the SECP over a period of 14 years from 2008 to 2021. Panel data analysis is based on the use of econometric techniques (fixed effects and random effects models) for estimation of results. Results of the study demonstrate that securities companies prefer to finance their assets with equity which denotes 72.15% of their total assets. In contrast, the total liabilities designate 27.85% of their assets. Profitability appears to be positively related to total and long-term debt ratios. The firm size is positive while tangibility is inversely associated with total and short-term debt ratios. Liquidity is negatively linked to all proxies of capital structure while the firm efficiency appears to have a positive connection with the short-term debt ratio. Results of the study are consistent with the predictions of trade-off and pecking order models. The empirical outcomes of the research offer some useful policy implications for regulatory authorities, managers and shareholders of the Securities Companies in Pakistan.


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How to Cite

Bibi, T., & Akhtar, M. H. (2024). Determinants of Capital Structure: Evidence from Securities Companies. Bulletin of Business and Economics (BBE), 13(1).

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