Abasyn Journal of Social Sciences. Special Issue: IGCETMA 2018

Pyramidal Ownership Composition and Firm’s Capital Structure Policy

Zeeshan Zaib Khattak, Abdus Sallam, Sammar Abbas, Muhammad Khushnood

Institute of Business Studies, Kohat University of Science and Technology

This research paper makes comparison between groups affiliated (pyramid) firms and non pyramid firmscapital composition. This research paper also determines pyramidal firms leverage as compare to standalone firms to know whether pyramidal firms maintain considerably greater debt level than standalone firms and whether pyramidal firms maintain higher leverage for tax advantages. The empirical evidences show that group affiliated firms are highly financed externally as compare to standalone firms. Group affiliated firms obtain more debt as compare to stand alone firms. Results show that firms with higher tangibility, profitability and cash in hand, obtain less debt. Findings also suggest that pyramidal firms do not obtain high level of debt for tax  advantage, while non-debt tax shield standalone firms have low leverage.
Keywords: Capital structure, Pyramid firms, Debt financing, Tax advantage.


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