Capital Structure Decisions among Indian SMEs: An Empirical Study of
Debt-Equity Choices and Firm Performance

Kavish Rungta; Dr. Manoj Verghese

doi:10.46609/IJSSER.2026.v11i10.011

Title: Capital Structure Decisions among Indian SMEs: An Empirical Study of Debt-Equity Choices and Firm Performance
Authors: Kavish Rungta and Dr. Manoj Verghese
Journal: International Journal of Social Science and Economic Research (IJSSER) ISSN: 2455-8834 Volume: 11 Issue: 10 Publication Date: October 2026 DOI: 10.46609/IJSSER.2026.v11i10.011
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Kavish Rungta1 and Dr. Manoj Verghese2 1. Student, Krishna Vikash Global School, Raipur, India 2. Director, School of Management & Commerce, Rungta International Skills University
MLA 8 Rungta, Kavish, and Dr. Manoj Verghese. "Capital Structure Decisions among Indian SMEs: An Empirical Study of Debt-Equity Choices and Firm Performance." Int. j. of Social Science and Economic Research, vol. 11, no. 10, Oct. 2026, pp. 5546-5562, doi.org/10.46609/IJSSER.2026.v11i10.011. Accessed Oct. 2026. APA 6 Rungta, K., & Verghese, D. (2026, October). Capital Structure Decisions among Indian SMEs: An Empirical Study of Debt-Equity Choices and Firm Performance. Int. j. of Social Science and Economic Research, 11(10), 5546-5562. Retrieved from https://doi.org/10.46609/IJSSER.2026.v11i10.011 Chicago Rungta, Kavish, and Dr. Manoj Verghese. "Capital Structure Decisions among Indian SMEs: An Empirical Study of Debt-Equity Choices and Firm Performance." Int. j. of Social Science and Economic Research 11, no. 10 (October 2026), 5546-5562. Accessed October, 2026. https://doi.org/10.46609/IJSSER.2026.v11i10.011.
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ABSTRACT: ‘Small and Medium-sized Enterprises (SMEs) adopt a careful and deliberate approach to optimizing their capital structures’. Discuss Capital structure and decision is among the strategic prediction that affects how a company performs, grows and the long-term health of SMEs in India. This paper examines the financing preferences of debt and equity favored by SMEs in India and their impact on firm's accomplishment. This research is an empirical on the connection between firm value, profitability proxies and leverage funded model based on 150 small?medium industrial or Service Company that published financial statements for period of 2019 up to 2023. It is examining the significance of pecking order and trade-off theories to the Indian SMEs and its association between financing decisions with variables like profitability, size of business, growth opportunity and asset tangibility. The approach is based upon multiple regression and correlation by taking financial ratios extracted (borrowing) from CMIE Prowess data base. The study's findings indicate that Indian SMEs exhibit a positive but moderate inclination towards debt financing. An important negative correlation exists between leverage and ROA. (ROA=-0.42, p

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