The study analyzed the determinants of capital structure for the textile composite sector of Pakistan after Akbar, Ali, & Tariq (2009) followed by Rajan and Zingales (1995), Shah and Hijazi (2005) and Hijazi and Tariq (2006). The study took the same variables as used by Akbar, Ali, & Tariq (2009) and Rajan and Zingales (1995) i.e. Tangibility, Size, Growth and profitablity as independent variables while Leverage as Dependent variable. These variables were observed for 46 sampled firms out of 50 firms from the textile Composite sector of Pakistan for the period of five years (2005-2009) using Pooled OLS model. Data was taken from the State Bank of Pakistan Publication “Balance Sheet Analysis of Joint Stock Companies Listed on Karachi Stock Exchange, 2005-2009”. The results are consistent with the previous studies. The results of the study showed that Profitability and Size is negatively related with leverage. Whereas tangibility and growh were
found to be positively corrlated with leverage, but the realtion of growh was found to be highly insignificant.
Keywords: Capital Structure, Growth and Profitability, Leverage