Firm Aggressiveness and Respective Performance Empirical Study under Pakistani Setting

摘要

Policy makers Aggressiveness and conservativeness regarding designing optimal capital structure (especially working capital) is a debatable matter from last 50 years. The phenomenon is still vague especially in Pakistan because of the information asymmetry and failure of perfect market hypothesis. The study investigates capital structure of all non-financial listed firms on Pakistan Stock Exchange (PSX) for the period of 2008 to 2014. To test the relation between dependent (ROI and ROA) and independent variables (AIP and AFP), the study employ control variables (ROE, ROCE, GROWTH, SIZE and AGE) and uses exponential generalized least square regression. Results reveals that financial managers aggressiveness regarding financial policy negatively, while aggressiveness regarding investment policy positively effecting the firm’s performance. The study also found that with the passage of time, firms in Pakistan devastating their performance. That’s why study found negative relation between firms’ age and dependent variables.