Effect of Debt Financing on Firm Performance: A Study on Non-Financial Sector of Pakistan

This study attempts to examine the association of different debt financing on firm’s performance in 14 sectors of Pakistan. Secondary data is collected about 14 different sectors in Pakistan Stock Exchange, for the time period of 9 years(2006 to 2014). The results of the study indicated that debt financing have negative but also significant impact on firm performance in Pakistan. This study findings recommends that companies should more rely on their internal source of finance because it is the cheap and reliable source of finance in Pakistani context.

Keywords: Short term, Long term debt, Total Debts, Firm Performance, Non-financial Sectors