Impact of Ownership Structure And Capital Structure On Firm Financial Performance: An Empirical Analysis Over Pakistan Stock Exchange (PSX) Listed Firms.

Abstract

In the course of recent decades, the relationship between capital structure, ownership structure and performance has been a significant and steady point in the corporate finance literature. The central tenant of this investigation is to examine the relationship between capital structure, ownership structure, and firm performance with respect to emerging economies like, Pakistani non-financial firms. Secondary data was used for this study, which was taken from state Bank of Pakistan, PSX and annual reports of the companies. The population of the study consist of Pakistani non-financial firms listed in PSX. The outcomes indicate that the overall capital structure proxies (i.e. DER & LTDR) are significant but negatively affected on firm’s performance (ROA & ROE).The outcomes of current study also suggested that there is a significant and positive relationship between ownership structure (i.e. Institutional & concentration ownership) and performance of the firms. This research is helpful for every company management to keep the optimal capital structure and make appropriate decision regarding ownership structure. In future research, researchers should use different proxies of ownership structure like, institutional ownership and family ownership to check the impact on firm performance.