Determinants of Firms’ Profitability in Pakistan

Abstract

The purpose of this study is to identify the determinants of firm’s profitability of Pakistani firms. The variables used in this study are capital structure, financial leverage, firm size and corporate profitability. The data was collected from 50 companies for period of 7 years from website of Karachi stock exchange. The ordinary least square regression was used to observe relationships among the dependent and independent variables. This study finds positive correlation among financial leverage and corporate profitability, and firm size and corporate profitability. Capital structure revealed negative relationships with corporate profitability. The study further anticipated the addition of supplementary variables to recover the strength and descriptive power of the general model.

Keywords: Corporate Profitability, Capital Structure, Firm Size, Financial Leverage.