Debt financing of corporate enterprises in India: a study showing impact of industry, size and age factors

The objective of this paper is to examine whether there are significant variations in the profile of debt‐financing as a result of differences in industry, size and age group of the sample corporate enterprises in India. It also ascertains the trend in debt financing practices among the various groups during the period 1992‐2003 and finds out the impact of the liberalized environment, in terms of the significant changes, if any, in phase‐2 (year 1998‐2003) of the liberalized business scenario vis‐à‐vis phase‐1 (year 1992‐1997) in the debt financing decisions of different group of the sample firms. The study covers a stratified representative sample of 601 corporate enterprises, consisting of fourteen industry groups, and is segregated into four size classes and two age categories. The study brings to fore that while industry and size have been observed to be a significant factor influencing composition and maturity structure of debt financing, the empirical evidence does not support the hypotheses that the debt financing decisions vary significantly across age categories.