Understanding Risk and Return: Shareholders' Perspectives on Capital Structure

Commerce

This study, titled "Understanding Risk and Return: Shareholders' Perspectives on Capital Structure," employs a combined descriptive and exploratory research design. The descriptive aspect aims to comprehensively analyze existing capital structure decisions and influencing factors, while the exploratory component seeks to identify novel insights and patterns. Focused on manufacturing businesses in Haryana, the study utilizes a non-probability purposive sample design with 120 companies in Rohtak. Data collection involves face-to-face interviews and secondary sources, enhancing the study's depth and reliability. The objective is to identify and analyze key factors influencing capital structure decisions. Factor analysis reveals four distinct components: Financial Performance and Stability, Leverage Ratios and Credit Ratings, Market Conditions and Investor Sentiment, and Management's Risk Tolerance. The high communalities and rotated factor matrix underscore the robustness of selected variables, contributing to a nuanced understanding. Cross-loading indicates potential interconnectedness between factors, reflecting the complexity of capital structure decisions. Findings offer region-specific insights for practitioners, policymakers, and researchers, aiding businesses in making informed and strategic choices. This study lays a foundation for future research, encouraging exploration of nuanced interactions between financial, market, and managerial elements influencing capital structure decisions in diverse regional contexts.

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