Vol. 12, Issue 1, Part A (2026)

Abstract
The determination of a firm’s capital structure remains a foundational conundrum in corporate finance, complicated in the Indian context by unique institutional frameworks and evolving regulatory paradigms. This research paper investigates the multifaceted role of corporate governance in shaping the capital structure decisions of Indian listed firms, specifically analyzing the impact of board characteristics, ownership concentrations, and regulatory mandates such as the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, including recent amendments through 2024 and 2025. By synthesizing theoretical foundations namely agency theory, pecking order theory, and trade-off theory the study explores how internal governance mechanisms mitigate agency conflicts and reduce information asymmetry, thereby influencing the choice between debt and equity. The findings underscore that while larger boards and gender diversity generally improve monitoring and facilitate access to external debt, the dominance of promoter ownership remains a critical moderating factor. Furthermore, the introduction of the Insolvency and Bankruptcy Code (IBC) has fundamentally shifted the power dynamic from "debtor-in-possession" to "creditor-in-control," significantly accelerating the speed at which over-leveraged firms adjust their debt levels. Utilizing a qualitative synthesis of dynamic modeling insights, the paper provides deep understanding into the governance-leverage nexus, highlighting that robust governance frameworks are essential for enhancing credit discipline and reducing the cost of debt in India’s emerging market.