Do debt, and operating efficiency contributes to corporate performance?

Prince Bhatia () and Rahul Kumar ()
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Prince Bhatia: Xavier Institute of Management, XIM University
Rahul Kumar: Indian Institute of Management Sambhalpur

International Journal of System Assurance Engineering and Management, 2024, vol. 15, issue 3, No 25, 1203-1209

Abstract: 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.

Keywords: Debt efficiency; Return on equity; Operational efficiency; Capital structure (search for similar items in EconPapers)
JEL-codes: G11 G30 G32 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13198-023-02206-6

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