Impact of Capital Structure on Stock Return in Oil & Gas Sector of Pakistan

Abstract

The given study investigates the influence of capital structure on the stock return in the context of oil and gas segment of Pakistan. For this purpose the analysis is conducted on 10 oil and gas companies operating in Pakistan on the basis of market capitalization over the period of 2005 to 2014. In order to inspect the impact of debt to equity and financial leverage on stock outcomes, the Correlation and regression models are used to test the results. This study has determined that the variation in capital structure does affect the stock return of oil and gas companies in Pakistan. Furthermore, Debt to equity ratio and financial leverage positively affect stock return. The Financial leverage and debt to equity positively affected the stock return and are showing significance with greater than 2 of “t” values and less than 0.05 of “p” values.

Keywords: Capital Structure, Stock Return, Debt to Equity, Financial Leverage.[1]

[1] Army Public College of Management Sciences affiliated with UET, Taxila, Pakistan.