Abstract

The study aims to explore the impact of capital structure on the energy sector in India. Several variables were identified in order to identify their effects on the capital structure of energy sector in India. The analysis comprises panel data set of 28 companies ranging from 2009 to 2020 which leads to a total of 336 sample size. Hausman test is performed to find the best fit model among the several panel data regressions. The variables firm size, interest coverage and operating expenses are significant in relation to book leverage of the firm. The findings of the study reveal that 43% of the book leverage of the firm on an average is explained by the mean industry book leverage, firm leverage one lag and mean firm leverage for past 3 years. The results projected clearly that the variables that were identified are statistically significant and suggested that the energy sector has comparatively less risk and has good profit. Hence, the companies under study have a significant impact on the energy sector. This research assists the practitioners to identify factors influencing capital structure of energy sector industry and deliberate on factors which may lead towards optimum capital structure.