Capital Structure and Value of Firm an Empirical Study on Automobile Industry in India

Abstract

A financing decision is the complementary decision which comes along with the investment decision of a firm. Whenever a firm is required to take an investment decision, it is also required to take its financing decision which eventually builds the capital structure of that firm. Capital Structure is an imperative managerial decision about the composition of internal and external funds that a firm should use to finance its investments. It is believed that a well analysed capital structure decision of any firm eventually benefits its shareholders wealth (Chowdhury and Chowdhury, 2010; Antwi and Mills, 2012; Rajhans and Kaur, 2013; Hossain and Hossain, 2014; Akhtar, Khan, Shahid, and Ahmad, 2016; Neha Poddar, 2017). Thus, the present study has made an attempt to find out whether the capital structure decisions about the amount of equity and/or debt to be used in the financing mix affects the market value or not, and therefore, it tried to examine the capital structure of the Indian automobile sector from a different and micro perspective. newline