Analysis of Determinants of Debt Financing: A Case study of the Cement Industry of Pakistan
: The aim of this study is to an analysis of Determinants of Debt Financing: A Case study of the Cement Industry of Pakistan. As Profitability is one of the best tools to measure the performance of any firm or sector. The current study also aims to analyze the impact of intangible assets on the profitability of the cement industry of Pakistan. To analyze the impact of intangible assets on profitability some control variables are also used in this research i.e. capital structure, firm size, growth rate, non-debt tax shield, and working capital, alongside these variables intangible assets are also used as a determinant of the profitability and age of the firm is used as a moderator between intangible assets and the profitability of the firm. The Data collected Twenty years of (unbalanced) annual data i.e. 1998 to 2017 of twenty cement companies listed under the Pakistan stock exchange is used and the data sources are secondary. To analyze the data panel data regression is used, the results of the study concluded that a positive and significant relationship exists between intangibles and profitability, and the age of the firm moderated the relationship between the two variables. Firms in Pakistan should report intangible assets in their financial statements, the managers of the said industry need to manage the intangible assets of their firm efficiently and should work on its disclosure in their financial statements.
Ali, A. D. M. Y. (2012). The contribution of cement industry in the economic development of Pakistan. Directorate general of training and research (Inland Revenue), Lahore, 1-32.
Akben Selçuk, E. (2016). Does firm age affect profitability? Evidence from Turkey.
Amato, L., & Wilder, R. P. (1985). The effects of firm size on profit rates in US manufacturing. Southern Economic Journal, 181-190.
Bradley, M., Jarrell, G. A., & Kim, E. H. (1984). On the existence of an optimal capital structure: Theory and evidence. The journal of Finance, 39(3), 857-878.
Baker, M., & Wurgler, J. (2002). Market timing and capital structure. The journal of finance, 57(1), 1-32.
Bell, E., & Bryman, A. (2007). The ethics of management research: an exploratory content analysis. British journal of management, 18(1), 63-77.
Barron, J. L., Fleet, D. J., & Beauchemin, S. S. (1994). Performance of optical flow techniques. International journal of computer vision, 12, 43-77.
Coad, A., Segarra, A., & Teruel, M. (2013). Like milk or wine: Does firm performance improve with age?. Structural Change and Economic Dynamics, 24, 173-189.
Donaldson, G. (2000). Corporate debt capacity: A study of corporate debt policy and the determination of corporate debt capacity. Beard Books.
DeAngelo, H., & Masulis, R. W. (1980). Optimal capital structure under corporate and personal taxation. Journal of financial economics, 8(1), 3-29.
Demsetz, H. (1973). Industry structure, market rivalry, and public policy. The Journal of Law and Economics, 16(1), 1-9.
Goddard, J., Molyneux, P., & Wilson, J. O. (2004). Dynamics of growth and profitability in banking. Journal of money, credit and banking, 1069-1090.
Hart, P. E. (2000). Theories of firms' growth and the generation of jobs. Review of industrial organization, 17(3), 229-248.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American economic review, 76(2), 323-329.
Jensen, M. C., & Meckling, W. H. (2019). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate Governance (pp. 77-132). Gower.
Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica: Journal of the econometric society, 649-670.
Katz, M. L., & Shapiro, C. (1994). Systems competition and network effects. Journal of economic perspectives, 8(2), 93-115.
Khan, A. G. (2012). The relationship of capital structure decisions with firm performance: A study of the engineering sector of Pakistan. International Journal of Accounting and financial reporting, 2(1), 245-262.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American economic review, 48(3), 261-297.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of financial economics, 13(2), 187-221.
Mehran, H. (1992). Executive incentive plans, corporate control, and capital structure. Journal of Financial and Quantitative analysis, 27(4), 539-560.
Moh'd, M. A., Perry, L. G., & Rimbey, J. N. (1998). The impact of ownership structure on corporate debt policy: A time?series cross?sectional analysis. Financial Review, 33(3), 85-98.
Najabat, A. (2015). Declining Employee Performance in Public Sector Organizations. An Etiological Study of Public Sector Organizations in Pakistani. International Journal of Politics and good Governance, 21(3), 16-23.
Pandey, R. K., Sahu, S. N., & Chandra, S. (2017). Handrook Of Semiconductor Electrodeposition. CRC Press.
Padachi, K. (2006). Trends in working capital management and its impact on firms’ performance: an analysis of Mauritian small manufacturing firms. International Review of business research papers, 2(2), 45-58.
Samarakoon, L. P. (1999). The capital structure of Sri Lankan companies. Sri Lankan journal of management, 4(1&2), 18-30.
Sanchez, P., Chaminade, C., & Olea, M. (2000). Management of intangibles–An attempt to build a theory. Journal of intellectual capital.
Schendel, D. E., & Hofer, C. W. (1979). A new view of business policy and planning. Strategic Management, Boston: Little, Brown Boston.
Sivathaasan, N., Tharanika, R., Sinthuja, M., & Hanitha, V. (2013). Factors determining profitability: A study of selected manufacturing companies listed on Colombo Stock Exchange in Sri Lanka. European Journal of Business and management, 5(27), 99-107.
Safdar, M. E., Noorka, I. R., Tanveer, A., Tariq, S. A., & Rauf, S. (2013). Growth and yield of advanced breeding lines of medium grain rice as influenced by different transplanting dates. JAPS, Journal of Animal and Plant Sciences, 23(1), 227-231.
Shah, A., & Khan, S. (2007). Determinants of capital structure: Evidence from Pakistani panel data. International review of business research papers, 3(4), 265-282.
Peng, S. B., Zhang, Y., Crider, B. P., White, A. E., Fried, V. A., Stone, D. K., & Xie, X. S. (1994). Reconstitution of the recombinant 70-kDa subunit of the clathrin-coated vesicle H+ ATPase. Journal of Biological Chemistry, 269(44), 27778-27782.
Pena, I. (2002). Intellectual capital and business start?up success. Journal of intellectual capital, 3(2), 180-198.
Velnampy, T., & Nimalathasan, B. (2010). Firm size on profitability: A comparative study of Bank of Ceylon and Commercial Bank of Ceylon Ltd in Srilanka. Global Journal of Management and Business Research, 10(2).