Authors: Dr. NISHI MALHOTRA

Abstract 
The research study evaluates the impact of various variables, such as profitability, bankruptcy costs, tangibility, and managerial ownership, on a company's capital structure. Moreover, its objective is to assess the influence of (ESG Score) sustainable initiatives and corporate governance on the firm's profitability and capital structure. According to the study, there is a positive relationship between tangible assets that a firm has and the leverage levels of firms. At the same time, the higher bankruptcy costs lead to a lower level of debt. Furthermore, it suggests that Return on Equity (ROE) positively impacts the Return on Assets (ROA), while debt negatively impacts the ROE. Data for the study was collected in 2 parts. In the first part for identifying the factors impacting the capital structure the data was collected through the 5-point likert scale and for the analysis of the impact of various factors on capital structure, data was collected from Bloomberg for the period 2019-2022. The principal component analysis was used to identify the factors impacting the capital structure and the dynamic panel random effects model was used to identify the impact of various factors on the leverage and capital structure of the firm. The study substantiates that the inclusion of female independent directors on the board of management leads to enhanced earnings per share (EPS). Additionally, the research study validates that sustainable ESG (Environment, Society, and Governance) initiatives positively impact a firm’s profitability. Conversely, it validates the negative impact of the debt on the profitability of the firm.
Keywords: Capital structure, Corporate Governance, ESG

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