This thesis examines the relationship between the systematic risk and the firm-specific variables of non-financial companies listed on Pakistan Stock Exchange. The thesis uses the beta of market model as proxy for the systematic risk of the firm and investigates its relationships with seven financial variables of the non-financial firms. The findings of 135 non-financial firms listed on Pakistan Stock Exchange obtained from fixed effects model over the period of 5 years from 2011 to 2015 indicate that the positive relationship of financial leverage and profitability with the systematic risk of firms, whereas, the size, liquidity and activity has negative impact on the systematic risk of the firm. The study disapproved the relation of two variables which are growth and operating leverage with the systematic risk. Moreover, the study has successfully implied the relationship between firm-specific variables and systematic risk which can be helpful in practical contribution in Pakistan to investors, managers and business owners in many ways. Supervisor:- Abdul Rashid