PurposeThis research paper aims to explore the relationship of financial performance and capital structure of Indian pharma firms of BSE 500, the impact of research and development (R&D) expenditure on financial performance and also explore the moderating role of competitive intensity between the existing relationship of capital structure and firm performance.Design/methodology/approachThe balanced panel data of listed pharma firms of BSE 500 are used for the research study, and the present study adopts both the panel and ordinary least square (OLS) estimation techniques to draw the results.FindingsThe results exhibit that the high debt ratio is harmful for the accounting performance of the selected sample of pharma firms of BSE 500. Besides, market competition negatively moderates the relationship between capital structure and firm performance.Research limitations/implicationsThe research findings provide evidence for the policymakers/regulators that the sample firms should discourage the high debt financing in the presence of competitive intensity in the product marketplace.Originality/valueThe core contribution of the current research is to examine impact of R&D expenditure on financial performance and the moderating role of market competition on the relationship of capital structure and firm performance to the best of the authors' knowledge, and no single study has previously explored this relationship in the context of BSE 500 pharma firms.
The National Stock Exchange and Bombay Stock Exchange are the two major stock exchanges in India. The Bombay Stock Exchange is the first stock exchange of Asia and 10th largest stock exchange in the world in the terms of market capitalisation. Stock markets significantly contributes in the economic development of India. The stock markets have volatile character which results into the uncertainty of the returns, volatility is caused by the variability in speculative market prices and the instability of business performance. Volatility plays a significant role in financial decisions of the investors, managers, policy makers and the researchers as it can assess the risk exposures in their investments and the uncertainty in stocks returns. The risk averse investor avoid investment in highly volatile market. The stock return forecasting leads to volatility forecasting. This paper has made an attempt to analyse the volatility with reference to Bombay Stock Exchange. The daily data of S&P Sensex 30 has been collected and used to calculate the volatility of stock market in India for last 3 years (April 2016 to March 2019). The preliminary analysis is done on the basis of descriptive statistics Stationery test, Normality test and serial correlation test. Volatility modelling is done by the ARCH and GARCH family models. The findings of the study will help investors in taking good investment decisions in Indian stock market in the presence of its volatile character.
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