This study examines the effect of capital structure and firm quality on firm value of selected BSE listed Indian hospitality firms over a time frame of 2001-15. Variables including firm quality measured through Altman Z score, leverage, size, profitability, tangibility, growth, liquidity along with macro variables of growth in gross domestic product and inflation are taken into consideration for examining their impact on firm value. An empirical study has been carried out through panel data techniques by applying pooled OLS, fixed effects and random effects models. The findings of the study reveal a significant relationship of firm value with firm quality, leverage, liquidity, size and economic growth. The study shows that Modigliani miller theorem of capital structure irrelevance does not hold for Indian hospitality sector. It is of practical significance for hotel owners to reassess their capital structure to improve firm quality and firm's market performance.

He partners with clients in consulting assignments in the areas of corporate governance, business strategy formulation, operating model design, process re-engineering, leadership development, coaching, HR technology and change management. He leads the Board Consulting practice for Korn Ferry Hay Group and works with India's leading boards on corporate governance initiatives. He has created and led India's Best Boards Study in partnership with The Economic Times for three successive editions. Nikhil Kolur is the Lead Consultant of Hay Group's annual India's Best Boards study. in based Mumbai. He has experience in providing business focused solutions to clients in the areas of Organisation Design, Strategic Workforce Planning, Job Evaluation and Talent Management. Nikhil has served clients across a wide range of sectors like Automobile, Chemicals, Energy, Financial Services, Media, Pharmaceuticals, Steel and Telecom. Divya is an Associate Consultant with Hay Group Mumbai office. She has experience in providing business focused solutions in the area of Organisation Design, Strategic Workforce Planning and Rewards and has served clients across a wide range of industries like �Textiles, Real Estate and Financial Services.