Factors that Influence Financial Leverage of Small Business Firms in India

Abstract

The purpose of this study is to examine the factors that influence financial leverage of small business firms in India. This study also seeks to extend the findings of Michaelas et al. (1999). Small business owners from Punjab area of India were surveyed in order to gather information. Subjects were asked about their perceptions, beliefs, and feelings regarding the factors that influence financial leverage of their firms. This study utilized survey research (a non-experimental field study design). The findings of this paper show that small business growth, small business performance, total assets, sales, tax, and family have positive influence on the financial leverage of small business firms in India. This study contributes to the literature on the factors that influence financial leverage of small business firms. The findings may be useful for the financial managers, investors, and financial management consultants.