Determinants of Capital Structure in India: A Study of Computer and Steel Industries

Authors

  • Ravneet Kaur

Abstract

The present paper examines the factors influencing capital structure of the companies belonging to two industries namely computer and steel that are listed at Mumbai Stock Exchange Ltd. The secondary data has been used to achieve the objective of this study. The data period ranges from 1999 to 2019 (i.e. 21 years).  The chosen period covers a complete business cycle i.e. both recessionary and booming phases of the industries.Here, the researcher has tested the null hypothesis: that there is no significant relationship between the financial leverage and various independent variables.The statistics like coefficient of determination (R2), ANOVA (F), Durbin Watson, and regression coefficients resulting from the application of Multiple Regression model were applied for the analysis of data. The results indicated thatcost of debt and cost of equity are found having negative values of regression coefficients and the same are significant at 2% and 1% level respectively in case of computer. The relationship between liquidity and leverage is negative (-0.199), but statistically significant. It means that the leverage of the firm is affected by liquidity of the firm.In case of steel industry two variables namely size of the firm and operating leverage are having positive and significant regression coefficients indicating a positive relationship with the leverage ratio whereas cost of debt, cost of equity, and DPR are found having negative and insignificant coefficients during the years 2009 and 2019.

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Published

2020-05-10

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Articles