LEVERAGE IMPACT ON INVESTMENT BEHAVIOUR OF SELECTED BSE-LISTED STEEL COMPANIES IN INDIA
Keywords:
Financial Leverage, Investment Behaviour, Capital Structure, Steel Industry, Panel Data Analysis, BSE-Listed CompaniesAbstract
The present study examines the impact of financial leverage on the investment behaviour of selected steel companies listed on the Bombay Stock Exchange (BSE). Investment decisions are crucial for firms operating in steel manufacturing, where large financial resources are required for plant expansion, technological modernization, and capacity development. The study uses panel data analysis to investigate how leverage and other firm-specific factors influence corporate investment decisions. Secondary data were collected from the annual reports of selected BSE-listed steel companies and financial databases for a specified study period. Investment behaviour is considered as the dependent variable, while financial leverage measured by the debt–equity ratio is the major explanatory variable. In addition, firm size, asset tangibility, growth opportunities, profitability indicators, and liquidity are included as control variables. Panel unit root tests and panel regression models, including fixed effect and random effect estimations, are employed to analyze the relationship between leverage and investment behaviour. The Hausman specification test is used to determine the most appropriate model for interpretation. The empirical results indicate that leverage has a negative but statistically insignificant impact on corporate investment among the selected firms. In contrast, asset tangibility and growth opportunities demonstrate a positive and significant influence on investment decisions, suggesting that firms with stronger asset bases and higher expansion prospects tend to invest more actively. Profitability and liquidity indicators do not show a significant effect on investment behaviour in the estimated models. The findings imply that investment decisions in the Indian steel sector are influenced more by asset structure and growth potential than by leverage levels alone.
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