DETERMINANTS OF CAPITAL STRUCTURE: AN EMPIRICAL STUDY OF LISTED TEXTILE COMPANIES IN INDIA

Abstract

Purpose --This paper aims to empirically investigate the capital structure determinants of Textile Industries of India listed on NSE (National Stock Exchange) during the Year of 2014-18 with a particular focus on short-term debt Ratio and long-term debt Ratio. Design/methodology/approach –Fixed affect panel data regression were used to analyze a sample of 18 Indian Textile Companies listed on NSE (National Stock Exchange) for which complete financial information was available for a Five year period, i.e. the 2014-2018. Findings – The results indicate that there is a significant and negative relationship between profitability, Short-Term, and Long-Term Debt Ratio. Moreover, The Short-Term Debt ratio is significant with Tangibility of the firm and Net Commercial Trade Position, Where Tangibility of the firm is negatively related and Net Commercial Trade Position is positively related. Short-Term Debt Ratio is not significant with Current ratio, Net Commercial Trade Position, Number of Non-Executive Members, Number of Executive Members Number of Audit Meetings, Number of Board Meetings and Quick Ratio, These all variable are having positively related except Quick Ratio. Whether Quick Ratio is negatively related. Practical implications – As debt policy influences Current Ratio, Net commercial Trade Position, Non-debt Tax Shield, Number of Non-Executive Members, Number of Executive Members, Number of Audit Meetings, Number of Board Meeting, Quick Ratio, Return on Assets, Tangibility of Firm financial institutions and managers may benefit from studies considering a relatively large number of capital structure determinants, several of which are linked to short- and long-term debt in various ways.