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Determinants of Choice Between Debt and Equity: Empirical Evidence from Indian Companies.
- Source :
- IUP Journal of Applied Finance; Jul2022, Vol. 28 Issue 3, p5-22, 18p
- Publication Year :
- 2022
-
Abstract
- The present paper attempts to study the determinants of choice between debt and equity for companies in India for a five-year period from 2015 to 2020 over a balanced panel dataset of firms listed on NSE-CNX 100. The study looks at the impact of explanatory variables such as, size, tangibility, age, liquidity, growth, profitability, volatility, debt serving capacity, and non-debt tax shield on Indian companies' long, short, and total debt ratios. Panel regression fixed effects model has been employed, and tangibility, size, age, liquidity, profitability and financial distress are found to be significant factors affecting capital structure ratio, whereas growth, non-debt tax shield and debt serving capacity did not show any significant effect on the debt ratio. For selected companies in India, the study's empirical findings support the pecking order theory rather than trade-off theory claims. [ABSTRACT FROM AUTHOR]
- Subjects :
- CAPITAL structure
DEBT
LIQUIDITY (Economics)
BUSINESS enterprises
Subjects
Details
- Language :
- English
- ISSN :
- 09725105
- Volume :
- 28
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- IUP Journal of Applied Finance
- Publication Type :
- Academic Journal
- Accession number :
- 159279610