Title: Factor influencing leveraging decision of Indian companies: evidence from panel data analysis

Authors: Kanika Sachdeva; Abhishek Agarwal

Addresses: EMPI Business School, Near CSKM Public School, Satbri, Chhatarpur, New Delhi – 110074, India ' Hummel India Pvt. Ltd., Sector 43, Gurugram, Haryana 122022, India

Abstract: In today's competitive environment, companies have to take lots of crucial financial decisions; a single wrong decision may lead to a huge cost to company. Identifying the various sources to raise funds is amongst the crucial activities and companies are free to decide an optimum capital structure in order to maximise their value. Therefore, it is essential for the companies to focus on factor influencing the leveraging decisions. Against this background, this paper examines the factors influencing the leveraging decisions of 100 Indian companies representing BSE-100 index during financial year 2008 to 2018. The analysis has been carried out using panel data analysis by dividing the companies in two groups on the basis of their age. The results revealed that, all factors except tangibility are significantly impacting the leveraging decision in all companies. Liquidity is found to be least influential for the companies existing for more than 40 years, whereas profitability and tangibility are observed to have least influence for the companies which are into existence for less than 40 years.

Keywords: leverage; panel data; Bombay Stock Exchange; Indian companies; equity; debt; liquidity.

DOI: 10.1504/IJBG.2023.134395

International Journal of Business and Globalisation, 2023 Vol.35 No.1/2, pp.134 - 146

Received: 16 Oct 2019
Accepted: 31 Mar 2020
Published online: 20 Oct 2023 *

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