Does Firm Size Influence Leverage? Evidence from India

Abstract

This study aims to investigate the size–leverage relationship in the context of India—one of the important emerging economies. Most of the studies that have tested the relationship between firm size and leverage have been conducted in the developed economies. For testing the much-discussed size–leverage relationship, we employ a large sample of firms for the study over a time span of 17 years from 2002 to 2018. Our findings support the negative size–leverage relationship, confirming the propositions of the pecking order theory. The study has implications for policymakers regarding the development of corporate debt market in India.