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Do debt, and operating efficiency contributes to corporate performance?

Author

Listed:
  • Prince Bhatia

    (Xavier Institute of Management, XIM University)

  • Rahul Kumar

    (Indian Institute of Management Sambhalpur)

Abstract

This research delves into the interplay between debt efficiency, operating efficiency, and firm performance, utilizing annual data from 2013 to 2019 for Indian-listed companies. Employing the GLS regression model, our findings reveal a significant negative relationship between debt efficiency and the financial performance of Indian firms. Conversely, operating efficiency exerts a notable positive influence on firm performance. Furthermore, our results affirm the significance of control variables such as sales growth, firm size, non-promoter shareholdings, and debt-equity ratio in shaping financial performance. This study underscores the pivotal role of an optimal capital structure mix in enhancing financial performance, particularly pertinent in India, where many firms are family-owned and heavily reliant on debt financing. Consequently, these findings hold valuable insights for investors making decisions within the context of family-owned firms in India.

Suggested Citation

  • Prince Bhatia & Rahul Kumar, 2024. "Do debt, and operating efficiency contributes to corporate performance?," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 15(3), pages 1203-1209, March.
    • Handle: RePEc:spr:ijsaem:v:15:y:2024:i:3:d:10.1007_s13198-023-02206-6
    DOI: 10.1007/s13198-023-02206-6
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    More about this item

    Keywords

    Debt efficiency; Return on equity; Operational efficiency; Capital structure;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • 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

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