Capital Structure and Firm Value: Indian IT Industry


Authors : Sayanth Sudheer; Vishnu N S

Volume/Issue : Volume 7 - 2022, Issue 3 - March

Google Scholar : https://bit.ly/3IIfn9N

DOI : https://doi.org/10.5281/zenodo.6516317

This research analyses how the capital structure affects the value of the firm of IT companies listed in the Bombay Stock Exchanges. The data was collected from financial statements of 20 IT companies listed in Bombay Stock Exchange from 2012 to 2021. Quantitative research method with panel regression was used in this study. This study has used Tobin’s Q ratio as the dependent variable. This study has also used Short term debt, Long term debt, Equity, Size, Liquidity and profitability as the independent variable. The results of the analysis show that long term debt is not affecting the firm value and the short term debt has a negative relationship with the firm value. Equity is positively affecting the firm value and is significant. Size and profitability has positive and significant relationship. Liquidity has a negative relationship with the firm value. Indian IT companies should try to decrease the debt in their capital structure and increase the equity to maximize the firm value.

Keywords : Capital Structure, Firm Value, Cost of Capital, Corporate Finance, IT Firms.

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