Title: Dynamics of capital structure and firm value of Indian listed firms: a PLS-SEM approach

Authors: Shikha Bhatia; Nidhi Singh

Addresses: International Management Institute New Delhi, B-10, Qutab Institutional Area, Tara Crescent, New Delhi-110016, India ' Jaipuria Institute of Management, Noida, India

Abstract: The present study examines the determinants of capital structure and evaluates their direct and indirect effect on firm value. Data over the financial years 2013 to 2017 was considered for the present analysis, resulting in a dataset of 5,445 firm-year observations for 1,089 firms for five years. We used pooled panel data for analysis using PLS-SEM approach. Our results explain the significant influence of nature of assets and firm's growth on capital structure decisions. The most significant variables that influence firm's value were seen to be firm's growth followed by firm's size. We also found a negative association between firm's leverage and its value. Results of the present study can be used to identify predictors of firm's leverage decisions that influence value of the firm.

Keywords: capital structure; firm's value; nature of assets; PLS-SEM; Indian firms.

DOI: 10.1504/IJICBM.2021.117874

International Journal of Indian Culture and Business Management, 2021 Vol.24 No.1, pp.43 - 62

Received: 05 Nov 2019
Accepted: 07 Aug 2020
Published online: 04 Oct 2021 *

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