Article Details
  • Published Online:
    January  2026
  • Product Name:
    The IUP Journal of Accounting Research & Audit Practices
  • Product Type:
    Article
  • Product Code:
    IJARAP200126
  • DOI:
    10.71329/IUPJARAP/2026.25.1.425-434
  • Author Name:
    Jeothilakshmi S K and Saranya P
  • Availability:
    YES
  • Subject/Domain:
    Finance
  • Download Format:
    PDF
  • Pages:
    425-434
Volume 25, Issue 1, January-March 2026
Effect of Capital Structure Decision on Firm Profitability: An Empirical Analysis of Listed Indian IT Firms
Abstract

The paper investigates the influence of capital structure decisions on the profitability of listed IT firms in India from 2018-2023. It employs panel data from 20 top NSE-listed IT firms to explore the relationship between capital structure decision and firm profitability using fixed effects regression by controlling firm size and sales growth. The results show a significant negative relationship between debt ratios and profitability, measured by ROE. The findings highlight the unique capital structure characteristics of Indian IT companies, emphasizing the need for conservative debt strategies and leverage policies. The paper offers useful insights for owners, financial managers, operators and lending organizations based on empirical evidence from IT firms.

Introduction

Finance is the lifeblood of organizations, and every decision related to financial resources plays a tremendous role in organizational success. Capital structure decision is one among them.