An Empirical Study on Determinants of Capital Structure in Indian Paper Industry

The aim of the study is to explore various factors related to book leverage in Indian paper manufacturing industry using panel data analysis. The investigation has been carried out using panel data for a sample size of 19 companies in Indian paper industry listed on Bombay Stock Exchange (BSE) for the time period 2009-2018, both inclusive. The Hausman test is performed to find the best-fit model among various panel data regressions.It is observed from the results thatfirm size, interest coverage and operating expenses appear to be statistically significant in relation with book leverage of the firm. The finding reveals that on an average 95.45% of book leverage of the firm is explained by firm leverage one lag, mean industry book leverage and mean firm leverage for last 3 years. The analysis carried out assists the practitioners understand the factors affecting the capital structure in the paper industry and deliberate on factors which could be modified with an aim to move towards optimal capital structure decision.