Comprehensive study of the capital structure of Indian software firms

Abstract

The recent financial crisis of 2008 has thrown up many challenges for the Indian industry in general. One of the main impacts of the crisis has been the effect on the capital structure of the firms and the types of debt that they hold. A lot of macro-economic factors which have an effect on the debt of a firm like exchange rate and government tax rules have changed. The growth of the IT industry has been one of the most defining elements in the growth of the Indian economy post liberalization. The dynamism & volatility of this industry – both technologically and financially, has demanded a robust capital structure with adequate liquidity. This calls for a study to assess the general financial trends that exist in the Indian IT industry from the turn of the millennium when it was at its nascent stage – through the dotcom bubble, the 2008 financial crisis and other major developments.