Title: Broadening the lens: capital structures and company performance in a new economy

Authors: Peixuan Wu; Muhammad Irfan Khan; Syed Imran Zaman; Saghir Pervaiz Ghauri; Miao Miao

Addresses: School of Statistics, Chengdu University of Information Technology, Chengdu, China ' Department of Accounting and Finance, College of Business Management, Institute of Business Management, Karachi, Pakistan ' School of Foreign Languages, Sichuan Tourism University, Chengdu, China; Department of Business Administration, Jinnah University for Women, Karachi, Pakistan ' Department of Economics, Jinnah University for Women, Pakistan ' School of Economics and Management, Chengdu Normal University, Chengdu, China

Abstract: The paper aims to examine factors that influence capital structure decisions of sugar and cement sector firms of Pakistan. The research incorporates specific firms along with macro-economic determinants of capital structure. As a test case, 29 sugar sector and 17 cement sector firms, listed in Pakistan Stock Exchange (PSX), were selected. The data consists of a ten year period, covering the years 2010-2021, using PLS technique. The results showed a significant impact of GDP, INF, GO and PROF on the capital structure decision of sugar sector firms whereas for the cement sector, FS and PROF are significant factors. The results supported trade-off as well as pecking order theories, indicating that no single theory completely explains the situation of the capital structure of Pakistan sugar and cement firms. Firms should consider the impact of selected variables while making capital structure decisions as ultimately it affects cost of capital which in turn influences shareholders' wealth.

Keywords: capital structure; profitability; firm size; growth opportunity; earnings volatility; ownership concentration; GDP; inflation rate.

DOI: 10.1504/IJMFA.2025.147035

International Journal of Managerial and Financial Accounting, 2025 Vol.17 No.3, pp.306 - 330

Received: 29 Jan 2023
Accepted: 26 Nov 2023
Published online: 10 Jul 2025 *

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