Does Working Capital Management Play Mediating Role? Determinants of Capital Structure

Abstract

The mediating effect of working capital is studied on the determinants of capital structure. This study is conducted in Pakistan on the sample of non-financial companies from 2010-2015. The panel regression is applied in three ways: firstly the pooled regression is applied; secondly the fixed effects model and finally the random effects model are applied. The results address that working capital play significant role between the capital structure and its determinants. With the inclusion of working capital as mediator the determinants like size, financial performance, mass and tangibility have become significant determinants of financial leverage.