Impact of Change in Capital Structure and Risk on Stock Return : A Study of Oil and Gas Sector of Pakistan Firms Listed on Pakistan Stock Exchange (PSX), Pakistan

Abstract

This paper studies the effects of change in capital structure and risk on returns of different companies working under the oil and gas sector in Pakistan. A sample of five companies were selected for this research. All companies were listed on Pakistan stock exchange. Capital structure is measured by the debt to equity ratio. Risk is being measured through beta, standard deviation and also coefficient of variance. This study is basically based on the data which was historical. Data showed the time period of five year from 2011-2015. This study includes the comparison of mean returns of all selected companies with risk factor and D/E ratio yearly. We got the results that mean stock returns of all companies showed an increase with the increase in the risk factor. Risk was very high in 2013 and return was also high among all years. D/E was very low among all years and its returns showed highest returns for this year than other years.