Abstract
This study presents empirical evidence on the determinants of the capital structure of non-financial firms in India based on firm specific data. A comparative analysis is done for pre-liberalization and post-liberalization periods. The study period and sample firms for pre-liberalization period are 1990-1992 and 498, respectively. The same for post-liberalization period are 1997-1999 and 1411. Empirical results imply that tax effect and signaling effect play a role in financing decisions where as agency costs effect financing decision of big business houses and foreign firms. It is also revealed that size of the firm and business risk became significant factors influencing the capital structure during post-liberalization period.
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