Does diversification affect capital structure and profitability in Pakistan?

Author(s)

Publication date

2012

Series/Report no

Asian Social Science;8(4)

Publisher

Canadian Center of Science and Education

Document type

Abstract

Diversification has become a common strategy of corporate risk management along with availing other potential benefits. The intent of this study is to identify and analyze the nature of relationship that exists between diversification and capital structure as well as profitability in Pakistan. For this purpose we use the 10 years’ (2000-2009) data of all the companies of chemical and food sector listed at the Karachi Stock Exchange (KSE). We find that the diversified firms are more profitable. Using independent variables of firm size, growth and tangibility the results show that whenever significant, the relationship is associated with greater amount of debt held by the firms

Keywords

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This work is licensed under a Creative Commons Attribution 3.0 License

Permanent URL (for citation purposes)

  • http://hdl.handle.net/10642/1643