A STUDY ON THE DETERMINANTS OF CAPITAL STRUCTURE OF INFORMATION TECHNOLOGY INDUSTRY IN INDIA

Abstract

Capital structure refers to the mix of debt and equity used by a firm in financing its assets. The capital structure decision is one of the most important decisions made by financial management. Since the foundational work of Modigliani and Miller (1958), a number of authors extended their capital structure irrelevancy theory. This study analyzed the impact of capital structure in the Indian IT Industry scenario. Generally after doing a number of review literature on this topic. I came across several independent variables which have an effect on the debt-equity variable (dependent). On the basis of these variables I have tried to form a model which will express the relationship model between the debt-equity variable with the independent variables. This paper studies the leverage decisions of Indian information technology (IT) sector firms. It attempts to explain the variation in capital structure of IT firms and determining variables using a regression model. It aims to explore the various factors that determine the choice of long term financing for listed firms. The impact of firms’ tangibility, size, profitability, liquidity and earning variability on capital structure of listed Information Technology is investigated.