Growth, debt, and financial risk in emerging markets : case studies form India | |
| Author | Sharma, Babita |
| Call Number | AIT RSPR no.SM-20-01 |
| Subject(s) | Financial risk management--India Capital market--India |
| Note | A research submitted in partial fulfillment of the requirements for the degree of Master of Business Administration |
| Publisher | Asian Institute of Technology |
| Abstract | When large companies fail, it not only affects the stakeholders but also the entire economy. So, it is important to understand the failure process of once-successful firms. An in-depth research study is conducted to study the process of debt-financed growth, the risks involved, and the outcome. A mixed research design with a multiple case study method is used to study the growth and failure process of four Indian companies. Both quantitative and qualitative analysis is done with quantitative analysis embedded in the case studies. We found that high leverage plays an important role in the bankruptcy of firms. Firms take more debt despite the risks because of the availability, overconfidence and the need to maintain control. When firms are highly leveraged, they become vulnerable to external risks. These external risks have more impact on leveraged firms due to the burden of debt obligations. The financial distress of firms decreases the value of the firms in terms of declining share prices and increasing risks for the shareholders and the lenders face default risk in this situation. When restructurings fail and bankruptcy finally occurs, every stakeholder in the firm loses value and their investment in the firm. However, bankruptcy is not the end for the companies. They can still rise in the supervision of new management. This study is very useful for companies opting for growth with debt financing. A detailed analysis of the growth and failure process with risk factors to the shareholders and creditors is provided in the study to help managers make proper capital structure decisions and understand the risks involved. |
| Year | 2020 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Venkatesh, Sundar |
| Examination Committee(s) | Vatcharapol Sukhotu;Zimmermann, Willi |
| Scholarship Donor(s) | Asian Institute of Technology Fellowship |
| Degree | Research Studies Project Report (M. BA.) - Asian Institute of Technology, 2020 |