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Title Micro and Macroeconomic Determinants of Cost of Capital A Cross Industry Analysis of Non-Financial Firms of Pakistan

Author(s) Tensar Abbas

Abstract Thesis Title: Micro and Macroeconomic Determinants of Cost of Capital A Cross Industry Analysis of Non-Financial Firms of Pakistan The research on the macro and microeconomic determinants of cost of capital: A cross industry analysis of non-financial sector of listed firm in Pakistan. The main objectives of this study are to find out the impact of microeconomic determinants on capital cost and to find out the impact of macroeconomic determinants on capital cost. In this research we selected the eight growth able industries from the all industries which are listed at Pakistan stock exchange. From the chemical, energy, cement, sugar, textile, paper, motor vehicles, and food sectors 102 firms selected as sample. The proportional sampling technique is used for the selection of sample size and collected the six-year data from 2011 to 2016. In our study we use the weighted average cost of capital (WACC) as dependent variable and we considered the eight independent variables and divided into the two categories. The independent variables are the current ratio (CR), Debt-to-equity ratio (DB), earnings per share (EPS), asset turnover ratio (AT), institutional ownership (IO), firm size (SIZE), as microeconomic based determinants and interest rate (IR), industrial production index (IPI), as macroeconomic based determinants of cost of capital. In this research, used the different statistic tools such as descriptive, regression analysis, correlation analysis for the investigation of relation between independent and dependent variables. The results of this research show that the debt to equity, earning per share, interest rate and industrial production index have the positive relation with the capital cost of companies. The size of companies and institutions ownership has the negative relation with capital cost of Pakistani companies. We also find the insignificant relation of current ratio and assets turnover. Key words: Macroeconomic, Determinants, Cost of capital, WACC

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Management Sciences

Language English

Publication Date 2018-11-13

Subject Finance

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