What is it about?
This study is the first to the author’s knowledge that explores the most significant determinants of capital structure of manufacturing firms in India by employing the most recent data. Moreover, this study also confirms that same factors affect the capital structure decisions of firms in developing countries as identified for firms in developed economies.
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Why is it important?
Multiple regression model and correlation matrix have been used as statistical tools to investigate the most significant determinants of capital structure of manufacturing firms in India with the help of SPSS Software . The results suggest that variables like asset composition, business risk and return on assets are positively related to debt ratio whereas firm size and debt service capacity are negatively related to debt ratio. The asset composition, business risk and return on assets appear to be significant determinants of capital structure while firm size and debt service capacity are insignificant determinants.
Perspectives
Writing this article was a great pleasure as well as learning as it has a highly experienced co-author with whom i have long standing collaboration. This article has helped to explore how same factors affect capital structure decisions of firms in developing countries as identified for firms in developed economies with the support of theories of finance. More than anything else, i find this article really triggering the thought process of minds of academicians in the field of finance.
Dr. Rajni Sofat sofat
Guru Nanak Institute of Management & Technology, Model Town, Ludhiana.
Read the Original
This page is a summary of: Determinants of capital structure: an empirical study of manufacturing firms in India, November 2017, Emerald,
DOI: 10.1108/ijlma-05-2016-0051.
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