Capital Structure and Firm Performance: An Empirical Study of Indian Companies using Age and Size as Moderators

Purpose: The main aim of this research is to explore the moderating effect of age and size of the firm on the relationship between selected capital structure and performance variables of non-financial Indian companies listed on an index of National Stock Exchange (NSE) named NSE 500 for a period of 21 years (2000-2020) Design/methodology/approach: Pooled Ordinary Least Square Method, Fixed Effect and Random Regression Model Findings: The empirical results show that selected variables of capital structure have a negative impact on financial performance variables. Further, with the inclusion of age and size as moderating variables under the selected Regression Model results showed that both the moderating variables play a significant moderating role in the relationship between capital structure and firm performance. Research implications/ limitations: The study has important implications for financial managers in taking capital structure decisions in large, medium and small sized firms and also for new and old firms, for lenders while taking lending decisions towards new and old firms, for investors while making investment decisions and for policy makers when designing debt policies for the sector or industry. Originality: This may probably be the first study that explores the impact of capital structure on the performance of Indian listed firms using age and size as moderators. Moreover, this paper also lays down some groundwork upon which a more detailed evaluation of Indian firms' capital structure and its impact on performance with liquidity, tangibility, and industry type as moderating variable