An Empirically Study of Determinants of Capital Structure of Non Financial Listed Companies in KSE

This study investigates the capital structure of nonfinancial firms registered on Karachi Stock Exchange (Pakistan) from 2004 to 2012 to find which independent variables determine the capital structure of Pakistani nonfinancial listed firms. We find a statistically significant Positive relationship between asset tangibility, firm size, growth opportunities and cash flow volatility. We find a statistically significant negative relationship between profitability and leverage. Profitability and leverage were shown an insignificant relationship with leverage. The existence of strong positive relationships between asset tangibility and size to leverage to be supporting the theoretical predictions of trade-off theory. So the findings of this study are consistent with the predictions of the pecking order theory, trade‐off theory which shows that the capital structure models are derived from developed countries which present some help in understanding of corporate financing behaviour of Pakistan nonfinancial listed companies. So research has been conducted in developed countries is also valid in Pakistan. Keywords: Pecking order theory, trade‐off theory, Capital Structure, tangibility, firm size, growth opportunities, cash flow volatility, profitability and leverage