Capital Structure and Firm Performance: Evidence from India

DOI:10.34047/MMR.2020.8205

Abstract

The review paper aim is to identify the status of existing studies conducted on capital structure and firm performance in the previous years. Furthermore, the study emphasises the gaps in the literature on capital structure and firm performance and also aim to identify scope of future research in this field. For this purpose, a systematic literature review is performed, wherein; literature ranging from theories of capital structure to studies in the area of capital structure and firm performance was reviewed. The outcomes of the study asserted that the relationship between the companies’ performance and the financial leverage is mixed, inconsistent and varied. Also, it was found that the influence of capital structure on firm performance varied from country to country and industry to industry. In the context of India, it was observed that the literature pertaining to capital structure and firm performance is weak and unstructured. Therefore, this study suggested that future scholars must deeply examine the relationship between capital structure and performance of the firms belonging to different industries in India.