Determinants of leverage: evidence based on BSE listed Indian auto ancillary firms

Animesh Bhattacharjee, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India
Madhu Kumari, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India
Joy Das, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India
Abstract

The primary objective of the present article is to investigate the impact of growth, liquidity, non-debt tax shield, profitability, size and tangibility on financial leverage with reference to Bombay Stock Exchange listed Indian auto ancillary firms. The study covered a period of 8 years (2013-2020) and applied correlation analysis, granger causality test and panel regression analysis. The findings of correlation analysis show that liquidity, profitability, and tangibility have significant association with financial leverage. The result of granger causality test indicates that liquidity and profitability granger cause leverage. Lastly, the regression analysis shows that liquidity and profitability have a significant negative impact on firms’ leverage. Overall, findings of the study support the pecking order theory.

Keywords: Financial leverage, liquidity, profitability, panel regression.

Suggested citation: Bhattacharjee, A, Kumari, M., Das, J. (2020). Determinants of Leverage: Determinants of leverage: evidence based on BSE listed Indian auto ancillary firms. Skyline Business Journal. 16(1), pp 29-44. DOI: https://doi.org/10.37383/SBJ160103 

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Notes on contributors
Animesh Bhattacharjee, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India

Madhu Kumari, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India

Joy Das, Department of Commerce, Tripura University, Suryamaninagar, Agartala, Tripura (West). India
Suggested citation
Bhattacharjee, A, Kumari, M., Das, J. (2020). Determinants of Leverage: Determinants of leverage: evidence based on BSE listed Indian auto ancillary firms. Skyline Business Journal. 16(1), pp 29-44. DOI: https://doi.org/10.37383/SBJ160103