Determinants of leverage -An Empirical analysis on Indian metal sector

D. Vijayalakshmi; Dr . Padmaja Manoharan

Volume : II, Issue : VII, July - 2013

Determinants of leverage -An Empirical analysis on Indian metal sector

D. Vijayalakshmi, Dr . Padmaja Manoharan

Abstract :

The principal sources of finance of a firm are owners’ equity and the borrowed money. The decision on the composition of funds, otherwise, known as ‘capital structure’ is an essential decision, which influences the risk and return of the investors. Leverage plays an imperative role in framing the capital structure. Metal sector is a capital intensive sector, where greater importance has been given in constructing the capital structure. In this backdrop, the study makes an attempt to identify and analyse the determinants of leverage of Indian metal sector. A panel data approach has been applied to analyse the data. The study reveals that the variables, namely, profitability, size and tangibility are the key determinants of leverage of Indian metal sector.