Determinants of Capital Structure Policy - Analysis of Airline Industry

Kumar, B R and Fernandez, M (2019) Determinants of Capital Structure Policy - Analysis of Airline Industry. International Journal of Business & Applied Sciences, 8 (1). pp. 30-38. ISSN 2165

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This study aims to understand the determinants of capital structure policy of airline industry. It examines the relevance of different debt theories in the context of airline industry. Using a sample of 50 airline firms, the average leverage of airline firms was found to be 3.66. Three different measures of leverage were regressed upon variables representing size, cash flow, profitability, growth, investment opportunities, risk, liquidity and efficiency measures. This study documents positive relationship between leverage and profitability as predicted by the tradeoff theory. It also finds some evidence for signaling theory. Profitable firms signal higher cash flow generation capacity of the firm and uses higher leverage. The negative relationship between leverage and growth confirms the prediction of tradeoff theory

Affiliation: Skyline University College
SUC Author(s): Fernandez, M ORCID:
All Author(s): Kumar, B R and Fernandez, M
Item Type: Article
Uncontrolled Keywords: capital structure, leverage, profitability, tradeoff theory, signaling theory pecking order theory, airline industry
Subjects: A Business and Management > AI Business Analytics
Divisions: Skyline University College > School of Business
Depositing User: Mr SUC Library
Date Deposited: 27 May 2022 13:46
Last Modified: 27 May 2022 13:46
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