1Student, Symbiosis Institute of Business Management, Symbiosis International University, Bengaluru, India
2Professor, Symbiosis Institute of Business Management, Symbiosis International University, Bengaluru, India
3Assistant Professor, National Institute of Banking Management, Pune, India
Online published on 29 December, 2017.
The study examines determinants of capital structure decisions of firms in the Indian healthcare industry, specifically in the Drugs and Pharmaceuticals sector. The paper further analyzes the trend in healthcare financing over a period of seventeen years from 2000 to 2016, and draws out the transformation in healthcare financing pre and post financial crisis of 2008.
An empirical analysis of short term and long term leverage of pharmaceutical companies was undertaken. A panel regression model was used to incorporate factors that drive capital structure decisions of firms.
The study finds that capital structure depends significantly on growth, profitability, non-debt tax shields and net fixed assets. It also finds that firms tend to maintain similar capital structures within the drugs and pharmaceutical industry in the long term. Financial crisis has significantly increased long term bank borrowing of firms in this industry.
The research provides insights into capital structure decisions of firms and provides an understanding of factors determining those decisions.
Capital Structure, Financial Crisis, Financing, Healthcare, Leverage
