• INSOLVENCY LAWS: A WALL OF CONTROL OVER CORPORATE WORLD

    Author(s):
    Devashish Sharma OP Jindal Global University
    Contributor(s):
    IJLLR (see profile)
    Date:
    2022
    Subject(s):
    Law
    Item Type:
    Article
    Permanent URL:
    https://doi.org/10.17613/1krp-xg94
    Abstract:
    This paper examines the current Insolvency Regime of the country and is based upon the pitfalls and inadequacy of insolvency legislations hegemonizing corporate sector in India. Debt Financing: A fundamental activity by Corporate Persons “The Pecking Order theory says that the firm will borrow, rather than issuing equity, when internal cash flow is not sufficient to fund capital expenditure” (Myers, 2001)1. In the process of financing a new venture the directors of a corporate firm estimate two major outcomes- whether the venture will maximize profit, or it will increase overall valuation of the firm. While the former outcome is limited to increase in wealth of shareholders, later increases market share, market value and overall income power of the corporation. Debt financing is a process which undertakes less cost of raising capital compared with equity issue, but it undermines the objective of profit because interest on liability is an expense, however, the corporation benefits in long run. Issuing equity to dilute current share of stakeholders is an indication to overvalued stock and on the other hand utilizing debt to fund a project is a sign of capability.
    Metadata:
    Published as:
    Journal article    
    Status:
    Published
    Last Updated:
    3 months ago
    License:
    Attribution-NonCommercial
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