An Empirical Analysis on Determinants of Financial Leverage of Listed Manufacturing Firms of India

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Kumar Gaurav, Vijay Agrawal


This study uses multiple regression models to research core determinants of the financial leverage or capital structure for Indian manufacturing firms. Specific conditional theories of capital structure such as trade-off theory, pecking order theory, stock market theory, bankruptcy theory, and agency theory are analyzed to develop testable hypotheses on deter- minants of manufacturing firms ’ capital structure. It was empirically found that the firm’s size, age, asset tangibility, asset efficiency, profitability, Tobin’s Q, business risk, and ownership structure are statistically significant or associated with the firm financial leverage or Core determinants of Indian capital structure of manufacturing sector.

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