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Serbian
Journal of Management
2017,
vol. 12, iss. 2, pp. 271-280
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Corporate
debt restructuring and firm performance: A study of Indian firms
Banaras
Hindu University, Institute of Management Studies, Varanasi, Uttar
Pradesh, India
e-mail: deep.msd@gmail.com
Abstract
Corporate
Debt Restructuring (CDR) mechanism was initiated by the Reserve Bank of
India (RBI) in the year 2001 as a remedial measure for preventing
delinquency in the accounts of corporate facing financial difficulties
due to internal and external factors. In this study an attempt has been
made to analyze the effectiveness of the CDR system in improving the
profitability of the firms. The sample consists of 91 firms that
received debt restructuring package under the system form the year
2003-2015. The post-restructuring performance of the firms has been
compared with their pre-restructuring performance and with their
industry peers with the help of Wilcoxon sign rank test. The
performance has been measured with the help of operating margin (EBDITA
as a percentage of total income) and interest coverage ratio. The
findings of this study reveal that sample firms were not able to
improve their performance even up to five years after debt
restructuring and they were performing significantly below their
industry peers.
This Work is licensed under a Creative Commons Attribution 4.0 License.
Keywords
CDR; debt
restructuring;
operating performance; EBDITA; industry adjusted median |
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