Impact of Macroeconomic Condition on Financial Leverage: Evidence from Indian Firms

Mukherjee, Sulagna and Mahakud, Jitendra (2012) Impact of Macroeconomic Condition on Financial Leverage: Evidence from Indian Firms. Journal of Management Research, 12 (3). pp. 128-140.

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Abstract

The objective of this paper is to investigate the role of economic condition on determination of financial leverage and the adjustment speed to target leverage for the Indian manufacturing companies. Using the pooled data and the generalized method of moments estimation techniques, we find the evidence that for the Indian firms, macroeconomic condition plays an important role for determination of financial leverage, all the firms do have the target leverage ratio across macroeconomic conditions and the adjustment speed to target leverage has been pro-cyclical. We also find that financing behavior of the companies is different in good and bad economic conditions for both book and market leverage ratios.

Item Type:	Article
Uncontrolled Keywords:	Financial leverage, macroeconomic condition, adjustment speed, pooled data; generalized method of moments;target leverage ratio
Subjects:	Economics Economics > Macroeconomics Finance
Divisions:	Finance and Strategy
Depositing User:	Mr Ramesh Kamath
Date Deposited:	23 Sep 2018 13:15
Last Modified:	23 Sep 2018 13:15
URI:	http://tapmi.informaticsglobal.com/id/eprint/132

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