Econometric Analysis of the Capital Structure Determinants

Indian Institute of Management Calcutta (IIMC)Working Paper Series No. WPS-333/98

22 Pages Posted: 15 Jan 2007

See all articles by Ram Kumar Kakani

Ram Kumar Kakani

Lal Bahadur Shastri National Academy of Administration (LBSNAA)

V. N. Reddy

Institute of Chartered Financial Analysts of India (ICFAI) - The Icfai University (IFHE), Hyderabad

Date Written: March 1998

Abstract

"Studies on capital structure have been concentrated in developed countries; a few of them have been in countries such as India. This paper provides a) an empirical examination to the widely held existing theories on the determinants of corporate capital structure and their maturity; and b) attempts to develop and test a new theory on capital structure for large manufacturing firms in developing economies such as India. For, the different empirical and managerial implications about different periods of debt instruments, we analyze measures of short-term and long-term debt rather than only an aggregate measure of total debt. The study also analyses the empirical implications of liberalization of Indian economy, on the determinants of capital structure of the firm. Some of the results were found contrary to the classical financial theory."

Keywords: capital structure, India, determinants, econometric analysis, financing policy, debt maturities, liberalization

JEL Classification: G32, G38, N25, N65

Suggested Citation

Kakani, Ram Kumar and Reddy, Vanga Nagi, Econometric Analysis of the Capital Structure Determinants (March 1998). Indian Institute of Management Calcutta (IIMC)Working Paper Series No. WPS-333/98 . Available at SSRN: https://ssrn.com/abstract=957087 or http://dx.doi.org/10.2139/ssrn.957087

Ram Kumar Kakani (Contact Author)

Lal Bahadur Shastri National Academy of Administration (LBSNAA) ( email )

Mussorie, Uttarakhand 248179
India

Vanga Nagi Reddy

Institute of Chartered Financial Analysts of India (ICFAI) - The Icfai University (IFHE), Hyderabad ( email )

Donthanapally Shankarapalli Road
RAJAWALA ROAD
Hyderabad, RI Andhra Pradesh 501203
India

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