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Capital structure determinants of Indian small and medium auto component enterprises - justifying theories of capital structure

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  • Sunit Prasad
  • Rohini Jha
  • Amar Nath Jha

Abstract

Academia across the globe has observed that small and medium enterprises face severe financial management issues threatening their survival. The problem Indian SMEs face is how to fund their projects. The present funding scenario heavily depends on their funds and short-term debt. This research examines the firm-specific factors affecting the capital structure of Indian small and medium enterprises (particularly the auto component industry) to understand their financial behaviour. The reason to choose a particular industry is stagnant growth and the rise of sick units yearly; more importantly-the financial behaviour of a specific SME industry has not been analysed so far. The sample comprises 155 non-financial operating firms, and the impact of firm-specific factors on the setups capital structure is gauged using the panel data regression over the period 2006-2017. Analysis reveals that entrepreneurs choose an inappropriate financing ratio based on operating needs.

Suggested Citation

  • Sunit Prasad & Rohini Jha & Amar Nath Jha, 2026. "Capital structure determinants of Indian small and medium auto component enterprises - justifying theories of capital structure," International Journal of Business Innovation and Research, Inderscience Enterprises Ltd, vol. 40(3), pages 326-362.
    • Handle: RePEc:ids:ijbire:v:40:y:2026:i:3:p:326-362
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