Browsing by Author "Fernandes, Moses"

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    Unveiling Key Drivers of Capital Structure: A Sectoral Study of Indian Manufacturing
    (South Asian Journmal of Management Research, Volume 15, No. 01, 2025) Fernandes, Moses
    This research fills a need in the literature by examining, at the firm level, the factors that have a substantial impact on the capital structure decisions made by manufacturing enterprises in India, as opposed to developed economies. Despite extensive research on capital structure determinants in advanced markets, limited attention has been given to emerging economies like India, where the dynamics of corporate finance are influenced by unique institutional, economic, and market conditions. This research explores firm-specific factors impacting the capital structure of Indian manufacturing firms using data spanning the financial years 2010-11 to 2019-20. To ensure robust analysis, the study adopts an innovative methodological framework combining the generalized method of moments (GMM) technique and the Random Forest model, a machine-learning approach. GMM is utilized to address endogeneity issues often present in dynamic panel data, while the Random Forest model identifies and ranks the key determinants of capital structure, adding a novel dimension to the analysis. By employing these complementary techniques, the study provides deeper insights into the factors shaping leverage decisions in Indian manufacturing firms. A significant contribution of this study is its sector-wise analysis, which evaluates whether firm-specific determinants of capital structure vary across different manufacturing sectors. A more detailed comprehension of leverage decisions is provided by this method, which takes into account the fact that different sectors exhibit different financial behaviour and operational traits. Particularly for developing nations, the results highlight the need for sector-specific approaches to fiscal management and policymaking. In sum, by combining time-honoured econometric methods with state-of-the-art machine learning models, this study adds to our knowledge of the factors that influence capital structure in the Indian setting. The results offer valuable implications for corporate managers, policymakers, and investors seeking to optimize leverage decisions in dynamic and diverse market conditions. This study also lays the groundwork for future research exploring the interplay between firm-specific characteristics, sectoral dynamics, and capital structure in emerging economies.