A Study on Determinants of Capital Structure in India

For the period 2010-2020, the report analyses the most important factors of capital structure of 5 listed Indian corporations. Regression analysis was used to assess ten independent variables and three dependent variables. Profitability, growth, asset tangibility, size, cost of debt, tax rate, and debt serving capability have been found to have a major impact on the leverage structure selected by enterprises in the Indian setting. While capital structure is usually given in the context of a choice between debt and equity, we can see distinct sources of capital, particularly regarding debt, even within these choices. Recent research have reached varying conclusions regarding the reliance on various sources of capital and the relevance of those sources. We discover that capital structure complexity is related to the requirement for external capital, access to debt markets, and the capacity for additional borrowing. Each of these characteristics has a distinct impact on capital structure complexity; nonetheless, for enterprises with a financial shortfall, access to capital markets functions as a lessening factor in capital structure complexity. One of the most important decisions in corporate finance is the financing decision. Financial directors must consider the question, “What is the optimal level of debt vs equity to employ in order to fund a firm’s operations?” The purpose of this essay is to examine the evolution of capital structure theory from both a theoretical and empirical standpoint. The major competing capital structure theories, as well as their predictions, are examined. It is demonstrated that there are consistently important firm-level factors that influence firm capital structures. The essay also compares the findings of empirical capital structure studies undertaken in developing nations with those conducted in the industrialised world. According to some, developing countries’ financial markets lack complexity, which may prevent corporations