Effect of Leverage Ratio and Ownership Structure on Internationalization of Indian Firms

The paper attempts to find a relation between internationalization of firms & the amount of leverage and ownership stake in the capital structure. 'Ownership' & 'Leverage' have been taken as independent variables for the purpose of this study; and 'Degree of internationalization'- defined as 'the percentage of total sales coming from foreign operation' is taken as the dependent variable for the purpose of this analysis. The multivariate dummy regression was run on the data of 100 firms to determine the nature of relationship between the capital structure and internationalization of firms. Further, t-test was used to find the strength of this relationship.

The study found that a significant relationship exists between the degree of internationalization and capital structure. Ownership impacts internationalization, much more that leverage. Also the number of years used in the study was found insignificant to influence the nature of relationship.