Journal of Commerce and Accounting Research

Inderjit Kaur ¹

Affiliations
1 Finance Department, National Institute of Financial Management, Faridabad, IN

Abstract

The objective of the paper is to survey the theories on the capital structure with objective to ascertain whether the capital structure decision is relevant for a firm. The theoretical underpinnings have been surveyed from the theory of irrelevance by Modigliani and Miller to recent theories like Pecking order and Market Timing theory of capital structure. The theoretical underpinnings have been substantiated with empirical evidences from developed and developing economies.

Keywords

Capital Structure, Value of Firm, Theory of Irrelevance, Pecking Order

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Inderjit Kaur ¹

Affiliations
1 National Institute of Financial Management, Faridabad, Haryana, IN

Abstract

The purpose of this paper is to analyse the effect of size, age, ownership, and load on the efficiency of equity mutual funds in India. Using secondary data on sample of 105 equity mutual fund schemes in India for the period 2011-12, two-stage methodology is applied wherein Data Envelopment Approach (DEA) efficiency scores are assessed in first stage and in the second stage, categorical variable on efficiency is regressed on age, size, ownership, and load of the scheme by applying cross-sectional logistic regression. The results of the analysis suggest that increase in size increases the probability of being efficient by 26-43 percent in various estimates. The more aged funds are more efficient. Load funds are less efficient and foreign funds are more efficient but joint-venture foreign funds are less efficient. Thus results show that in country like India, there exists increasing returns to scale and experience in the market increases the efficiency.

Keywords

Data Envelopment Analysis Approach, Mutual Funds, Size Effect, Ownership Effect, Age Effect, JEL Code: C14, C61, G21, G23.

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