Do intellectual capital efficiency and institutional quality influence a firm’s capital structure? Evidence from India

Ahmed Mohamed Habib, Tamanna Dalwai, Gaitri Chugh and Syeeda Shafiya Mohammadi

Journal of Economics, Finance and Administrative Science, 2025, vol. 30, issue 60, 318-336

Abstract: PurposeThis research explores the influence of intellectual capital (IC) efficiency (ICE) and institutional quality (IQ) on a firm’s capital structure (CS) in Indian firms.Design/methodology/approachThe analysis was conducted on a sample of Indian companies from 2015 to 2019. Data were collected from the S&P database, and regression and additional analyses were performed to achieve the objectives of this research.FindingsThe findings show a significant positive effect of ICE on a firm’s CS from debt (CSD) and an insignificant positive effect of IQ on CSD and CS from equity (CSE). The findings also indicate that human-capital efficiency (HCE) and capital-employed efficiency (CEE) are the main IC sub-dimensions influencing a firm’s CS, compared to the structural-capital efficiency (SCE) dimension.Practical implicationsThe results of this study have several practical implications, as they examine the influence of ICE and IQ on CS as potential determinants, which could help business leaders adopt optimal CS strategies.Originality/valueThe results of this study offer several novel contributions to the existing literature on CS by examining unexplored factors, such as ICE as a knowledge management strategy, ICE sub-dimensions, and IQ in the context of CS.

Keywords: Intellectual capital; Institutional quality; Governance; Capital structure; Capital management; Finance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jefasp:jefas-02-2023-0039

DOI: 10.1108/JEFAS-02-2023-0039

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