2025, Vol. 6, Issue 2, Part V
Capital structure analysis of service industries in India: A multi-dimensional empirical study of determinants and theoretical alignments
Author(s): Ruma Dey
Abstract: This study provides an exhaustive empirical analysis of the capital structure dynamics within the Indian service industry, which has emerged as the primary engine of national growth, contributing approximately 55.3% to the Gross Value Added (GVA) in the 2024-25 fiscal year. The research investigates the applicability of the Modigliani-Miller Theorem, Trade-off Theory, and Pecking Order Theory across heterogeneous sub-sectors, including Information Technology (IT), Telecommunications, and Healthcare. By analyzing longitudinal data from 2012 to 2025, the study identifies that high-profitability, low-tangibility sectors like IT strictly adhere to the Pecking Order Theory, maintaining near-zero debt levels to minimize cost of capital and avoid signaling risks. In contrast, infrastructure-heavy sectors demonstrate an alignment with the Trade-off Theory, balancing tax shields against the risks of financial distress. The study further examines the moderating role of Indian Accounting Standards (Ind AS) adoption, finding that while it has improved transparency, it has paradoxically intensified market risk-aversion toward leveraged firms. The research concludes with strategic recommendations aimed at deepening India's corporate bond market and leveraging digital infrastructure to optimize financing for service-oriented enterprises.
DOI: 10.22271/27084515.2025.v6.i2v.935
Pages: 1992-1995 | Views: 98 | Downloads: 42
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How to cite this article:
Ruma Dey. Capital structure analysis of service industries in India: A multi-dimensional empirical study of determinants and theoretical alignments. Asian J Manage Commerce 2025;6(2):1992-1995. DOI: 10.22271/27084515.2025.v6.i2v.935
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