Centres Of Excellence

To focus on new and emerging areas of research and education, Centres of Excellence have been established within the Institute. These ‘virtual' centres draw on resources from its stakeholders, and interact with them to enhance core competencies

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Faculty

Faculty members at IIMB generate knowledge through cutting-edge research in all functional areas of management that would benefit public and private sector companies, and government and society in general.

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IIMB Management Review

Journal of Indian Institute of Management Bangalore

IIM Bangalore offers Degree-Granting Programmes, a Diploma Programme, Certificate Programmes and Executive Education Programmes and specialised courses in areas such as entrepreneurship and public policy.

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About IIMB

The Indian Institute of Management Bangalore (IIMB) believes in building leaders through holistic, transformative and innovative education

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Firm Characteristics, Corporate Governance and Capital Structure Adjustments: A Comparative Study of Listed Firms in Srilanka and India

Understanding capital structure dynamics is crucial to make corporate financing decisions. Extant academic literature does not provide a comprehensive analysis of capital structure dynamics, especially in the context of emerging market economies. This study endeavours to fill the gap by identifying and comparing the determinants of speed of adjustment towards the optimum capital structure between listed firms in Sri Lanka and India. Specifically, this study analyses the impact of firm-specific characteristics as well as corporate governance factors on the speed of adjustment to the optimum debt ratio. The sample comprises  a panel of 90 listed firms in  each country, i.e., on the Colombo Stock Exchange (CSE) of Sri Lanka and on the National Stock Exchange (NSE) of India, over a period of 10 years ranging from 2003/04 to 2012/13. Consistent with more recent as well as prior studies, at the initial step in this study, the optimal leverage is calculated by estimating panel regressions based proxies of the true debt ratio on the aforementioned firm level variables. Subsequently, Generalised Method of Moments (GMM) System technique is used to examine the capital structure dynamic adjustments. Firm specific capital structure determinants are found to be significantly similar in both countries, revealing similar effects on leverage. Further, this study reveals similarities between firms in both countries on adjustment towards their optimum/ target capital structures over time as postulated by the dynamic considerations of the trade-off theory. However, for Indian firms (nearly 26%), the speed of adjustment is estimated to be lower than that of Sri Lankan firms (nearly 45%). Moreover, we found that the factors affecting the benefits and costs of adjustments to optimum leverage, at both firm level and corporate governance, vary between Sri Lankan and Indian firms.