Designing an optimal capital structure depends on a number of micro and macro economic factors. And searchers in the past have tried to establish the factors that could be clear determinants of the firm’s capital structure. Some of them have presented affirmative evidences in respect of a particular factor or a group of factors as the determinants of corporate capital structure, whereas others have presented dissenting evidences in respect of the same factor or factors to be a clear determinant of the corporate capital structure. Scott (1972) and Scott and Martin (1976) have presented empirical evidences claiming that industrial class has got influence on the firm’s financial structure. Scott and Martin (1976) also support the view that size might shape the firm’s debt-equity mix. Remmers, Stonehill, Wright and Beekhuisen(1974), on the other hand, have presented contrary opinion arguing that none of these two factors - size and industry class - is a clear determinant of the firm’s use of debt capital. Against this backdrop, the present paper empirically establishes that both industry size and class have significant bearings on the corporate capital structure of industries in India.
Cite this article:
A. K. Das Mohapatra. Determinants of Corporate Capital Structure: Evidence from Indian Industries. Asian J. Management 3(1): Jan. – Mar. 2012 page 10-13.