Firm Characteristics Determining Capital Structure of Indian Firms: A Review of Literature

This paper presents a comprehensive literature review aimed at enhancing the understanding of existing research on capital structure, with a specific focus on identifying key determinants and uncovering gaps that warrant further investigation. The review examines studies that explore the factors influencing the leverage of the firms and how leverage affects the firm value. The literature encompasses contributions from both developed and developing economies, offering a broad perspective on the subject. However,particular emphasis is placed on research conducted in the Indian context, given the study’s focus on Indian firms. Relevant studies from neighboring countries are also considered to provide a more regional understanding. The review highlights that while considerable work has been undertaken in this area, significant variations remain in the findings due to differences in market structures, regulatory environments, and firm-specific characteristics. These inconsistencies underscore the need for further empiricalanalysis, particularly within emerging markets like India. The findings of this review provide a solid foundation for future research and offer insights that can guide corporate financing decisions and policymaking. Overall, this study contributes to the ongoing discourse by synthesizing existing knowledge and identifying areas where more focused inquiry is required.