ARTICLE

IMPACT OF CREDIT RATING PROFITABILITY AND LIQUIDITY ON CAPITAL STRUCTURE AND INFORMATION ASYMMETRY EVIDENCE FROM PAKISTANI NONFINANCIAL SECTOR

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12 Pages : 105-116

http://dx.doi.org/10.31703/ger.2018(III-I).12      10.31703/ger.2018(III-I).12      Published : Jun 2018

Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector

Abstract

    This study conducted for the nonfinancial sector of Pakistan, Total number of observations for the study is 600 with a group of 120. The dependent variable for this study is Capital structure and discretionary accrual, while independent variables include credit rating, profitability, and liquidity. The study developed two models for answering the research questions and objectives. Model one is about the impact of credit rating, profitability and liquidity on the capital structure, while model two is to examine the impact of credit rating and profitability on discretionary accrual. The results of the study show that credit rating and profitability positively impact capital structure and liquidity has a negative impact on capital structure. Moreover, in the second model, credit rating and profitability positively impact discretionary accrual. Another interesting finding from this study is that high rated firms more actively involved in asymmetry information. Due to this, in the financial market, investors invest in firms that increase the profitability of the firm.

    Credit Rating, Profitability, Capital Structure, Pakistan, Non-Financial Sector

    (1) Muhammad Anees Khan
    Senior Assistant Professor, Department of Management Sciences, Bahria University, Islamabad, Pakistan.
    (2) Syed Imran
    Lecturer, Institute of Business Studies & Leadership, Abdul Wali Khan University, Mardan, KP, Pakistan.
    (3) Muhammad Jehangir
    Assistant Professor, Institute of Business Studies & Leadership, Abdul Wali Khan University, Mardan, KP, Pakistan.
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Cite this article

APA

    APA : Khan, M. A., Imran, S., & Jehangir, M. (2018). Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector. Global Economics Review, III(I), 105-116. https://doi.org/10.31703/ger.2018(III-I).12

CHICAGO

    CHICAGO : Khan, Muhammad Anees, Syed Imran, and Muhammad Jehangir. 2018. "Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector." Global Economics Review, III (I): 105-116 doi: 10.31703/ger.2018(III-I).12

HARVARD

    HARVARD : KHAN, M. A., IMRAN, S. & JEHANGIR, M. 2018. Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector. Global Economics Review, III, 105-116.

MHRA

    MHRA : Khan, Muhammad Anees, Syed Imran, and Muhammad Jehangir. 2018. "Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector." Global Economics Review, III: 105-116

MLA

    MLA : Khan, Muhammad Anees, Syed Imran, and Muhammad Jehangir. "Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector." Global Economics Review, III.I (2018): 105-116 Print.

OXFORD

    OXFORD : Khan, Muhammad Anees, Imran, Syed, and Jehangir, Muhammad (2018), "Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector", Global Economics Review, III (I), 105-116

TURABIAN

    TURABIAN : Khan, Muhammad Anees, Syed Imran, and Muhammad Jehangir. "Impact of Credit Rating, Profitability and Liquidity on Capital Structure and Information Asymmetry: Evidence from Pakistani Non-Financial Sector." Global Economics Review III, no. I (2018): 105-116. https://doi.org/10.31703/ger.2018(III-I).12