IDEAS home Printed from https://ideas.repec.org/a/kap/apfinm/v32y2025i4d10.1007_s10690-024-09491-6.html
   My bibliography  Save this article

Financial Surplus and Capital Structure Dynamics: Evidence from Indian Firms

Author

Listed:
  • Ajay Kumar Mishra

    (Indian Institute of Technology (IIT) Kharagpur)

  • Yogesh Chauhan

    (Indian Institute of Management Raipur)

  • Trilochan Tripathy

    (Department of Finance and Accounts, Xavier School of Management (XLRI))

Abstract

This study examines the capital structure adjustment process followed by Indian Firms. Our study focuses on investigating when a firm changes its capital structure. We discover a pattern of capital structure adjustments among Indian firms, where the financial surplus or deficit of Indian firms drives the decision to adjust the capital structure. The results show that the capital structure adjustment speed for Indian firms measured using book-value-based leverage is around 39% when firms have an above-target debt with a financial surplus and about 26% when firms have a below-target debt with a financial deficit. The adjustments occur when firms have above-target/below-target debt with a financial surplus/deficit. Our results show that Indian firms adjust their capital structure conditioned upon the firm’s financial surplus/deficit.

Suggested Citation

  • Ajay Kumar Mishra & Yogesh Chauhan & Trilochan Tripathy, 2025. "Financial Surplus and Capital Structure Dynamics: Evidence from Indian Firms," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 32(4), pages 1383-1405, December.
    • Handle: RePEc:kap:apfinm:v:32:y:2025:i:4:d:10.1007_s10690-024-09491-6
    DOI: 10.1007/s10690-024-09491-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10690-024-09491-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10690-024-09491-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:apfinm:v:32:y:2025:i:4:d:10.1007_s10690-024-09491-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.