Determining the key factors of corporate leverage in Indian manufacturing firms using dynamic modelling

Using a data set of Indian Manufacturing companies (NSE 500), this paper examines the relationship between corporate governance characteristics and firm-specific factors in predicting leverage decisions of a firm. The paper specifies partial adjustment model and utilises System Generalised Method of...

Full description

Saved in:
Bibliographic Details
Published in:Cogent business & management 2022-12, Vol.9 (1), p.1-15
Main Authors: Gulzar, Ishfaq, Haque, S.M. Imamul
Format: Article
Language:English
Subjects:
Accounting
Auditing standards
Capital structure
Corporate governance
Costs
Current liabilities
Debt financing
Financial leverage
Generalised Method of Moments (GMM)
leverage
Literature reviews
Manufacturing
speed of adjustment
Stockholders
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Using a data set of Indian Manufacturing companies (NSE 500), this paper examines the relationship between corporate governance characteristics and firm-specific factors in predicting leverage decisions of a firm. The paper specifies partial adjustment model and utilises System Generalised Method of Moments (GMM) to find out the factors affecting speed of adjustment. The results of this study show that non-debt tax shield positively affects SOA, whereas growth, tangibility and firm size negatively influence SOA. In the case of corporate governance variables, board size, board independence, ownership concentration and corporate governance index reveal a positive influence on SOA. The paper also confirms that it takes around 2.65 years to offset half of the target leverage from current leverage.
ISSN:2331-1975
2331-1975
DOI:10.1080/23311975.2022.2149145