A Research Paper Firm Value and the Capital Structure A Study of Indian Corporate

The various financing decisions are essential for the financial benefit of the firm. A forged decision about the capital structure may lead to financial suffering and ultimately to insolvency. The management of a firm sets its capital structure in a way that firm's value is maximized. However, firms do choose diverse financial leverage levels in their effort to get an optimal capital structure. According to academic and pragmatic research there is an optimal capital structure, there is no specified methodology, yet, that financial managers can use in order to achieve an optimal debt level. However, financial theory do facilitate in understanding how the selected financing mix affects the firm's value. Existing empirical research on capital structure and firm value has been largely confined to the United States and a few other advanced countries. Many real-world firms take their capital structure decisions based on industry averages. The debate is whether capital structure decisions create firm value. The factors that drive the firm to design its own capital structure and to find the relationship between the capital structure and firm value and to what extent the capital structure does have the effect on firm value