Impact of capital structure on profitability and earnings of the firm; a study on Pakistani companies from Non-Financial sector


  • Hasnain Raza university of central punjab
  • Faiza Akhtar
  • Mohsin Rehman
  • Sehrish Naeem
  • Muhammad Aamir Ali





Eviews 8, Panel Regression, Hausman Test, Random Effect Model, ROE, EPS, DE and DA.


Capital structure is the driver of profitability and earnings of any company; therefore, the impact of capital structure is analyzed in companies selected from non-financial sector of Pakistan including public and private sector. The financial data of 22 companies has been observed from 2010-2015. Eviews 8 has been used to analyze the panel regression. The Hausman test confirms that random effect model is appropriate for both ROE and EPS. Findings reveal that DE is insignificantly negatively related to ROE but significantly positively related to EPS, where DA is insignificantly positively related to ROE but significantly negatively related to EPS. The policy makers of sample companies should consider the impact of capital structure on EPS.


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