Impact of financial distress on corporate leverage in India - An empirical analysis Sharma Shashank1, Kansal Ajay Kumar2 1Research Scholar, School of Management, Gautam Buddha University, Greater Noida, India, Email id: inbox2903@gmail.com 2Assistant Professor, School of Management, Gautam Buddha University, Greater Noida, India, Email id: ajay@gbu.ac.in Online published on 4 July, 2023. Abstract An empirical analysis has been performed to analyse the association between annual growth of corporate debt and recent rise in the distressed assets, keeping in view the overall economic growth as a control variable. Long-term time-series data of twenty-three years, has been considered and analysed using multivariate regression analysis, from 1997–98 to 2019–20. The rationale behind the analysis has been the rise in distressed assets, and its consequent effects on the leverage structure of the non-financial Indian corporates. Findings suggest that, the rise in distressed assets has a significant negative impact on the annual growth of corporate borrowings, with β = -0.172. On the contrary, economic growth has a significant positive impact on the annual growth of corporate borrowings with β = 2.224. However, in the presence of annual economic growth as a control variable, a significant R2 change of 0.784 has been observed. Top Keywords Financial Distress, Economic Growth, Stressed Assets, Corporate Finance. Top |