Authors: Elena Goldman, P.V. Viswanath
Addresses: Lubin School of Business, Pace University, 1, Pace Plaza, New York, NY 10038, USA. ' Lubin School of Business, Pace University, 1, Pace Plaza, New York, NY 10038, USA
Abstract: This paper looks at the financial structure for Indian firms and investigates plausible relationships between export status and leverage over the last decade. If product demand from abroad has a low correlation with domestic demand, we would expect export-intensive firms to have greater cashflow stability due to diversification; this implies that they would also be able to support higher financial leverage. On the other hand, exporting firms have been shown to incorporate intangible assets, which allow them to increase their profitability; this would suggest a lower debt ratio. The diversification and cashflow stability hypotheses are accepted.
Keywords: capital structures; export intensity; cashflow volatility; financial leverage; India; export status; product demand; domestic demand; foreign demand; stability; diversification; exporting firms; exporters; intangible assets; profitability; debt ratios; globalisation; trade; global markets; global economy; policy analysis.
International Journal of Trade and Global Markets, 2011 Vol.4 No.2, pp.152 - 171
Published online: 08 Apr 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article