{"title":"Financial Surplus and Capital Structure Dynamics: Evidence from Indian Firms","authors":"Ajay Kumar Mishra, Yogesh Chauhan, Trilochan Tripathy","doi":"10.1007/s10690-024-09491-6","DOIUrl":null,"url":null,"abstract":"<div><p>This study examines the capital structure adjustment process followed by Indian Firms. Our study focuses on investigating when a firm changes its capital structure. We discover a pattern of capital structure adjustments among Indian firms, where the financial surplus or deficit of Indian firms drives the decision to adjust the capital structure. The results show that the capital structure adjustment speed for Indian firms measured using book-value-based leverage is around 39% when firms have an above-target debt with a financial surplus and about 26% when firms have a below-target debt with a financial deficit. The adjustments occur when firms have above-target/below-target debt with a financial surplus/deficit. Our results show that Indian firms adjust their capital structure conditioned upon the firm’s financial surplus/deficit.</p></div>","PeriodicalId":54095,"journal":{"name":"Asia-Pacific Financial Markets","volume":"32 4","pages":"1383 - 1405"},"PeriodicalIF":2.3000,"publicationDate":"2024-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Asia-Pacific Financial Markets","FirstCategoryId":"1085","ListUrlMain":"https://link.springer.com/article/10.1007/s10690-024-09491-6","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This study examines the capital structure adjustment process followed by Indian Firms. Our study focuses on investigating when a firm changes its capital structure. We discover a pattern of capital structure adjustments among Indian firms, where the financial surplus or deficit of Indian firms drives the decision to adjust the capital structure. The results show that the capital structure adjustment speed for Indian firms measured using book-value-based leverage is around 39% when firms have an above-target debt with a financial surplus and about 26% when firms have a below-target debt with a financial deficit. The adjustments occur when firms have above-target/below-target debt with a financial surplus/deficit. Our results show that Indian firms adjust their capital structure conditioned upon the firm’s financial surplus/deficit.
期刊介绍：
The current remarkable growth in the Asia-Pacific financial markets is certain to continue. These markets are expected to play a further important role in the world capital markets for investment and risk management. In accordance with this development, Asia-Pacific Financial Markets (formerly Financial Engineering and the Japanese Markets), the official journal of the Japanese Association of Financial Econometrics and Engineering (JAFEE), is expected to provide an international forum for researchers and practitioners in academia, industry, and government, who engage in empirical and/or theoretical research into the financial markets. We invite submission of quality papers on all aspects of finance and financial engineering.
Here we interpret the term ''financial engineering'' broadly enough to cover such topics as financial time series, portfolio analysis, global asset allocation, trading strategy for investment, optimization methods, macro monetary economic analysis and pricing models for various financial assets including derivatives We stress that purely theoretical papers, as well as empirical studies that use Asia-Pacific market data, are welcome.
Officially cited as: Asia-Pac Financ Markets
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