Historical Market-to-Book Ratio and Corporate Capital Structure: Evidence from India

Mukherjee, Sulagna and Mahakud, Jitendra (2012) Historical Market-to-Book Ratio and Corporate Capital Structure: Evidence from India. Global Business Review, 13 (2). pp. 339-350.

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Official URL: https://dx.doi.org/10.1177/097215091201300211


This paper tries to identify the nature of historical market-to-book ratio, that is, whether it can be used as a market timing proxy or growth opportunity proxy and to find out its impact on capital structure and the adjustment speed to target capital structure. Using a panel data analysis we find the evidence that the historical market-to-book ratio has been a better proxy for growth opportunity than market timing and it plays a significant role for determination of capital structure for Indian manufacturing companies. We also find that Indian manufacturing companies do have a target capital structure and the speed of adjustment to this target capital structure has been around 40 per cent, but the historical market-to-book ratio does not have a significant impact on the speed of adjustment.

Item Type: Article
Uncontrolled Keywords: Historical market-to-book ratio; capital structure; market timing; growth opportunity; speed of adjustment
Subjects: Economics
Divisions: General Management and Enterpreneurship
Depositing User: Mr. Muralidhara D
Date Deposited: 27 Nov 2018 10:31
Last Modified: 27 Nov 2018 10:31
URI: http://tapmi.informaticsglobal.com/id/eprint/491

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