The Impact of Financial Leverage on Firm Performance: Evidence from Russia

2015 ◽  
Author(s):  
Evgeny Ilyukhin
Keyword(s):  
Firm Performance ◽  
Financial Leverage ◽  
The Impact

scholarly journals The impact of financial leverage on firm performance: evidence from Russia. 

2015 ◽  
Vol 9 (2) ◽  
pp. 24-36
Author(s):  
Евгений Валерьевич Илюхин
Keyword(s):  
Firm Performance ◽  
Interest Rates ◽  
High Growth ◽  
Order Theory ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Growth Potential ◽  
Financial Leverage ◽  
Pecking Order Theory ◽  
The Impact

Евгений Валерьевич Илюхин - Кафедра Экономика, Управление и Информатика, Институт Авиационных Технологий и Управления Ульяновского Государственного Технического Университета. Электронная почта: [email protected] The relationship between financial leverage and firm performance is studied in this paper. Financial leverage can positively influence firm performance because leverage can be treated as a tool for disciplining management. As such a positive relationship between financial leverage and firm performance is expected based on the agency cost theory. However it is not always applicable to the firms with too high portion of debt. It is because high indebtedness may lead to significant financial limitations and that influences firm performance negatively. A ratio of firm debt to total assets is used as financial leverage measure while return on assets, return on equity and operating margin are employed as firm performance measures. The results for a large sample of Russian joint-stock companies over the period 2004-2013 years show that the impact of financial leverage on Russian firms’ performance has been negative. It can be explained by ineffective corporate control of Russian market, debt attracting difficulties, high growth potential and high interest rates for financing through debt.  The findings are robust to using different measures of firm performance, checking sub-samples and time clusters and employing alternative estimation approach. The results thus support pecking-order theory but are not consistent with trade-off or free-cash-flow theories.

scholarly journals Leverage and performance: do size and crisis matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Albert Danso ◽  
Theophilus A. Lartey ◽  
Daniel Gyimah ◽  
Emmanuel Adu-Ameyaw
Keyword(s):  
Firm Performance ◽  
Financial Crisis ◽  
Firm Size ◽  
Financial Leverage ◽  
Content Type ◽  
Econometric Methods ◽  
And Performance ◽  
Using Data ◽  
Measure Of Performance ◽  
The Impact

PurposeThis paper contributes to the capital structure literature by examining the impact of financial leverage on firm performance and also the extent to which firm size and crisis matter in the leverage -performance relationship.Design/methodology/approachUsing data from 2403 Indian firms during the period 1995–2014, generating a total of 19,544 firm-year observations, panel econometric methods are employed to test the leverage-performance relationship.FindingsDrawing insights from agency theory and using Tobin's Q (TQ) as our main measure of performance, the authors uncover that financial leverage is negatively and significantly related to firm performance. The authors also observe that the impact of financial leverage on firm performance is lower for smaller firms than larger ones. Finally, the authors show that the 2007/08 financial crisis had no significant impact on the relationship between financial leverage and firm performance.Originality/valueThe paper provides fresh evidence on the impact of leverage on performance, particularly from the Indian context. This study is also among the first studies to examine the role of firm size and financial crisis in the leverage-performance relationship.

scholarly journals The Firm’s Performance in Relation to Capital Structure and Foreign Ownership: Evidence from Vietnam

2021 ◽  
Vol 5 (1) ◽  
pp. 35
Author(s):  
Duy Suu Nguyen ◽  
Viet Dan Nguyen ◽  
Duc Thanh Tran ◽  
Michael Joseph Dempsey
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Random Effect ◽  
Foreign Ownership ◽  
Positive Influence ◽  
Least Square ◽  
Financial Leverage ◽  
Creative Commons ◽  
Negative Effect ◽  
The Impact

The paper examines the impact of capital structure in the context of foreign ownership on firm performance on non-financial companies in Vietnam between 2008 and 2018. The study employs Pooled OLS, Fixed effect, random effect, and Generalized Least Square to analyze the data. The study finds a non-linear relationship of foreign ownership and firm performance, so that the relationship, which is at first a positive one, becomes negative beyond a certain level of foreign ownership (30-45% ownership depending on the measure of performance). This insight is then combined with a generally inverse relationship between capital structure and performance. Besides, we find that the firm’s size (SIZE) has a positive influence on profitability and financial leverage, while both financial leverage (LEV) and the number of listed years of company (AGE) impact negatively on firm performance. Furthermore, growth of sales (GROWTH) has a positive effect on the debt ratio, and growth rate (GDP) has a negative effect on financial leverage. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium provided the original work is properly cited.

ICT SMEs, Performance, Absorptive Capacity and Transformative Capacity

2019 ◽  
Vol 118 (3) ◽  
pp. 178-188
Author(s):  
Yeon-Sung Cho ◽  
Kyung-Il Khoe
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Empirical Analysis ◽  
Absorptive Capacity ◽  
Latent Variables ◽  
Equation Modeling ◽  
Transformative Capacity ◽  
The Impact ◽  
The Empirical Analysis ◽  
Innovative Capacity

This study intends to integrate the relationship of market orientation, innovative capacity and firm performance to Information and Communication Technology(ICT) SMEs. The purpose of this study is to identify the role of absorptive capacity and transformative capacity that affect the performance of ICT SMEs. Hypotheses were established between five latent variables. A total of six hypotheses were established including the moderated effects of absorptive capacity and transformative capacity. Of the data collected after the survey, 112 valid surveys were selected as the final sample, except for 17 questionnaires with high non - response and insincere response. The empirical analysis of this study used smartpls3.0, Partial Least Squares (PLS), a variance-based structural equation modeling. The empirical analysis of this study revealed that the impact of market orientation on innovative capacity was significant. Moreover, the innovative capacity had a positive effect on the performance of ICT SMEs. In addition, the absorptive activity had a positive moderated effect between the market orientation and the innovative capacity. On the other hand, the transformative capacity showed a positive moderated effect in relation to innovative capacity and firm performance. Our empirical results have demonstrated the importance of knowledge based capacity in the ICT SMEs.

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