Journal Press India^®

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This study investigates the relationship between capital structure and firm performance using the data of 500 NSE companies in India. Theoretical basis suggests that there should be a certain level of debt in a company's capital structure which helps you attain tax benefits and hence better performance. However, in recent years, large corporations are pursuing to reduce the debt capital, even making it zero. The disparity between theoretical framework and practicality makes a compelling reason to revisit the relationship between capital structure and firm performance. The study used secondary data of Nifty 500 companies sourced from CMIE Prowess for 12 years (2006-2018). The regression analysis results support the view that capital structure influences firm performance, thus leaving scope for further examination of this theory-practice nexus.

Keywords

Capital structure; Profitability; Firm performance; Debt to equity ratio; Total debt to total assets; Current ratio; Return on equity.

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