THE IMPACT OF CAPITAL STRUCTURE ON THE VALUE OF THE FIRM FOR SELECT INDIAN AUTOMOBILE COMPANIES

The composition of financial structure to be employed by the companies is a complex decision making activity. The financial manager has to be very particular in his decision making process as his decision will directly have an impact on the shareholders wealth. This study will guide us in understanding the relationship between Capital Structure and the Firm value in the selected Indian Automobile companies. The automobile industry is one of the fastest growing sectors in India and its role in the GDP has been phenomenon. Indian Auto industry became the 4th largest in the world in 2017. It is the single most industry capable of contributing as much as 10 percent of the Gross Domestic Product of India. The paper explores the impact of capital structure on the value of the selected Automobile firms listed on NSE for a time period of 5 years i.e. from 2012-13 to 2016-17. The variables for the study included total value of the firm, capital structure, profitability, efficiency, growth rate, liquidity, and business risk. The study employs panel data model namely, Ordinary Least Square (OLS) and Fixed Effects Model (FEM) to study the impact of capital structure on the value of the firm.