Capital structure and financial performance: Does Global financial Crisis matter?
This study aims to examine the relationship between capital structure and financial performance of the power and energy sector of Pakistan, before and after the financial crisis. The secondary data type is used. Analyzed through the fixed-effect model, it is concluded that the overall leverage ratio of the power and energy sector of Pakistan in the before-crisis period is lower than an after-crisis period, supporting POT. Further, OLS regressions were run for two sub-periods separately. After analyzing the Pooled regression results for each sub-period, it is also concluded that ROE and CAR have a significant negative relationship with TDE, and ROA and GPM have a positive significant relationship with TDE before the crisis. FAR has a positive and significant relationship with LTD before the crisis. Further, ROE and FAR has a negative significant relationship, and size has a positive significant relationship with TDE after the crisis. Moreover, CR, FAR, and size have a positive significant relationship with LTD after the crisis.