The moderating role of firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan
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Received July 15, 2020;Accepted November 18, 2020;Published December 15, 2020
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Author(s)Link to ORCID Index: https://orcid.org/0000-0001-9449-1047Link to ORCID Index: https://orcid.org/0000-0003-3914-6755Link to ORCID Index: https://orcid.org/0000-0001-9472-5878Link to ORCID Index: https://orcid.org/0000-0002-1602-4782Link to ORCID Index: https://orcid.org/0000-0003-1399-6129
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DOIhttp://dx.doi.org/10.21511/imfi.17(4).2020.29
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Article InfoVolume 17 2020, Issue #4, pp. 341-355
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Cited by4 articlesJournal title: Humanities and Social Sciences CommunicationsArticle title: Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysisDOI: 10.1057/s41599-021-00778-xVolume: 8 / Issue: 1 / First page: / Year: 2021Contributors: Sarfraz Hussain, Van Chien Nguyen, Quang Minh Nguyen, Huu Tinh Nguyen, Thu Thuy NguyenJournal title:Article title:DOI:Volume: / Issue: / First page: / Year:Contributors:Journal title: Innovative MarketingArticle title: Relationship between marketing strategy and profitability in industrial firms: Evidence from JordanDOI: 10.21511/im.19(2).2023.02Volume: 19 / Issue: 2 / First page: 17 / Year: 2023Contributors: Mohammad Fawzi ShubitaJournal title: European Business ReviewArticle title: Does corporate green innovation unlock financial doors? The mediating role of environmental performanceDOI: 10.1108/EBR-01-2024-0048Volume: / Issue: / First page: / Year: 2024Contributors: Mohammad A.A. Zaid, Ayman Issa, Fitim Deari, Ploypailin Kijkasiwat, Vijay Kumar
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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.
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JEL Classification (Paper profile tab)G32, L11, L14
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References66
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Tables5
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Figures1
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- Figure 1. Conceptual framework
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- Table 1. Empirical literature review
- Table 2. Descriptive statistics
- Table 3. Correlation matrix
- Table 4. Linear regression model
- Table 5. Nonlinear regression
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Data curation
Sarfraz Hussain, Abdul Quddus
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Formal Analysis
Sarfraz Hussain, Abdul Quddus, Pham Phat Tien
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Investigation
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Sarfraz Hussain, Abdul Quddus, Pham Phat Tien, Muhammad Rafiq
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Writing – original draft
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The present study contributes to existing literature by presenting one of the very recent findings on this topic while simultaneously testing the validity of recent local and international methodologies, in order to inform policy change. -
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