An Empirical Study on the Determinants of the Capital Structure of Listed Indian Firms
Narayan Rao Sapar
Indian Institute of Technology (IIT), Bombay - Shailesh J. Mehta School of Management (SJM)
Institute for Financial Management and Research (IFMR) - Centre for Advanced Financial Studies
This study presents empirical evidence on the determinants of the capital structure of non-financial firms in India based on firm specific data. A comparative analysis is done for pre-liberalization and post-liberalization periods. The study period and sample firms for pre-liberalization period are 1990-1992 and 498, respectively. The same for post-liberalization period are 1997-1999 and 1411. Empirical results imply that tax effect and signaling effect play a role in financing decisions where as agency costs effect financing decision of big business houses and foreign firms. It is also revealed that size of the firm and business risk became significant factors influencing the capital structure during post-liberalization period.
Number of Pages in PDF File: 27
Keywords: capital structure, tax effects, signaling effects, agency costs
JEL Classification: G32working papers series
Date posted: November 12, 2003
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