Factors that Influence Financial Leverage of Small Business Firms in India

Abstract

The purpose of this study is to examine the factors that influence financial leverage of small business firms in India. This study also seeks to extend the findings of Michaelas et al. (1999). Small business owners from Punjab area of India were surveyed in order to gather information. Subjects were asked about their perceptions, beliefs, and feelings regarding the factors that influence financial leverage of their firms. This study utilized survey research (a non-experimental field study design). The findings of this paper show that small business growth, small business performance, total assets, sales, tax, and family have positive influence on the financial leverage of small business firms in India. This study contributes to the literature on the factors that influence financial leverage of small business firms. The findings may be useful for the financial managers, investors, and financial management consultants.

Analysis of Factors Influencing Financial Leverage In Lithuanian Listed Companies

“…That is because non-debt tax shields imply a reduction to taxable profit and one may expect a lesser need for financial leverage in this area. This can be also considered to be in conflict with the reviewed research, in particular, findings of N. Dwenger and V. Steiner (2009), M. Z. Frank and V. K. Goyal (2003a) and A. S. Gill, H. S. Mand, S. P. Sharma and N. Mathur (2012. In particular, it is in conflict with the research of N. Dwenger andV.…”

“…A. Brander (2005), J. J. Chen (2003), A. S. Gill et al (2012), R. Stretcher andS. Johnson (2011), T. S. Zaher (2010).…”

“…Chen (2003), A. S. Gill et al (2012), A. Hovakimian (2004), R. Stretcher and S. Johnson (2011), T. S. Zaher (2010. The research in this area was initiated by work of S. Ross and work of H. Leland andD.…”

“…Frank and V. K. Goyal (2003), A. S. Gill et al (2012), A. Hovakimian (2004, J. R. S. Ramalho and J. L. Silva (2006), R. Stretcher and S. Johnson (2011), T. S. Zaher (2010). The framework was adapted to capital structure decisions by M. C. Jensen and W. H. Meckling in 1976(Kumar, 2007.…”

“…The factors influencing financial leverage and most commonly identified in the empirical research are: firm size (Kurmar, 2007;Ezeoha, 2008;Frank and Goyal, 2003a;Ramalho and Silva, 2006;Seppa, 2008), profitability (Kumar, 2007;Chen, 2003;Gill et al, 2012;Shaher, 2012;Ramalho and Silva, 2006), growth (Gill et al, 2012;Ramalho and Silva, 2006;Chen, 2003), assets (Frank and Goyal, 2003a;Chen, 2003;Gill et al, 2012), taxes (Dwenger and Steiner, 2009;Frank and Goyal, 2003a;Gill et al, 2012), financial constraints (Frank and Goyal, 2003a;Ramalho and Silva, 2006;Shaher, 2012).…”