Discussion paper by: Manmohan Agarwal, Rumi Azim & Neha Betai.

The paper analyses the behavior of a sample of large cap, mid cap and small cap firms. It finds that the rate of return over equity declines for large cap and mid cap firms but not small cap firms. We find that gross fixed assets grew faster for mid cap firms. This implies that for most large cap and small cap companies there was no increase in their real capital stock. We then try to explain the increase in gross fixed assets. Sales are significant for the three groups of companies. Exports are significant for large and mid cap companies. The D/E ratio has a significant positive effect for large and mid cap companies but not for small cap companies. The rate of return influences investment by for small cap companies but not the other groups. 

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