Ummara Fatima

The study explores the moderating role of firm size on the relationship between capital structure and performance of the Pakistani textile sector. The study extracted statistics from the annual reports of the textile firms listed at the Pakistan Stock Exchange (PSE) from 2010–2017. The study applies several panel data diagnostic tests and then projected a feasible generalized least square (FGLS) regression model for testing primary and moderated effects of firm size on capital structure-performance relation by taking asset tangibility as a control variable. The study outcomes depict that 65% of assets of Pakistani textile companies are financed by debt, suggesting that textile companies are functioning with high levels of financial leverage. The total debt ratio of firms is moderately highly leveraged, as the average value is around 65%. The research has important practical consequences that will help textile industry financial managers adopt the optimal mix of capital structure when debt borrowing could enhance performance.

Purpose - The study sought to explore the association of ownership structure on the performance of conventional and Islamic commercial banks of Pakistan keeping leverage as a moderator.

Methodology - The study takes data from the annual reports of the banks (Islamic and conventional) listed at Pakistan Stock Exchange during 2008-2016. The study first applies simple regression to check the primary effects of ownership structure on performance, and then moderated regression to examine the impact of leverage on ownership structure-performance relationship of Islamic and conventional banks of Pakistan by taking growth and earnings volatility as control variables.

Findings - The overall results of the study depict that in case of both Islamic and conventional banks managerial and institutional ownership is showing significant positive relationship with return on equity (ROE) other than institutional ownership, which is showing negative significant relationship with ROE in case of conventional banks of Pakistan. By summing up the results of the study, there is no consent on the moderating effect of leverage on ownership structure-performance relationship of conventional and Islamic banks of Pakistan; further research is called for.

Practical implications - The work has important practical consequences that would facilitate the financial managers of banking industry to identify the dimensions of ownership structure, when debt borrowing could enhance performance. The results of this study provide better insights into the ownership structure-performance relationship of Islamic and conventional banks on parallel lines. Findings give better understanding to the management of the banks (either Islamic or conventional); how they can improve their practices toward ownership structure which up bring the performance.

Originality - The key impact of this chapter is usage of previously little studied area of Islamic and conventional banking on the relationship of ownership structure and performance by taking leverage as moderator. Moreover, findings of this study set groundwork upon which the impact of another moderating variable (more than one) can be analyzed. Furthermore, apart from banks, more comprehensive analysis of ownership structure of different financial studies could be studied.