The Impact of the Degrees of Operating and Financial Leverage on Systematic Risk of Common Stock

1984 ◽  
Vol 19 (1) ◽  
pp. 45 ◽  
Author(s):  
Gershon N. Mandelker ◽  
S. Ghon Rhee
Keyword(s):  
Systematic Risk ◽  
Common Stock ◽  
Financial Leverage ◽  
The Impact

scholarly journals THE IMPACT OF DEGREE OF FINANCIAL LEVERAGE AND DEGREE OF OPERATING LEVERAGE ON THE SYSTEMATIC RISK OF COMMON STOCK

2020 ◽  
Vol 4 (1) ◽  
pp. 24-32
Author(s):  
Khadija Younas ◽  
Muhammad Sarmad
Keyword(s):  
Systematic Risk ◽  
Regression Technique ◽  
Securities Market ◽  
Financial Leverage ◽  
Wealth Maximization ◽  
Independent Variables ◽  
Risk Return ◽  
Operating Leverage ◽  
The Impact

The aim of this study is that the to evaluate the effect of financial leverage and operating leverage on the systematic risk of stock. In trendy competitive business era, the power to extend come of the firm is usually depends on economical use of leverage within the capital structure. Leverage is outlined as an extended term debt funding that improves the permanent financial performance yet because the success of the organization. It conjointly explained because the use borrowed funds to ascertain investment and come thereon investment however it’s a lot of risky if they can’t be ready to generate higher rate of come in compare with value of capital. For this reason, the determination of the proportion of debt and equity is one in every of the foremost essential choices that the organization faces, and any variability in leverage will influence a company’s monetary capability, risk, return, investment, strategic call and therefore the wealth maximization of organization. During this study, financial leverage and operating leverage as independent variables and systematic risk because the variable is considered. This study used a quantitative analysis style. The population of the study was created from the 8 cement industries of Pakistan. The study used secondary knowledge that was obtained from the annual audited monetary statements that had audited and revealed by securities market of Pakistan for an amount of five years between 2014 and 2019. This study used a correlation analysis and a multiple rectilinear regression technique in analyzing the collected knowledge. The study found that financial leverage and operating leverage had a big positive relationship with systematic risk of stock. This study covers that financial leverage and operating leverage have an immediate result on the systematic risk of stock in a very companies’ come. The study counseled that management of corporations listed at the securities market to draw in smart management therefore to beat the danger of stock. Whereas important at ≤ 0/05 H0 hypothesis, is rejected. Otherwise, there’s no different adequate reason for rejecting H0 hypothesis. For testing the hypothesis of this study, rectilinear regression technique has been used. In step with the results obtained, H0 is rejected because of important = zero.00< 0.05. This analysis is 100% because of all knowledge is collected from the correct places.

scholarly journals The Impact of Financial Leverage on Shareholders’ Systematic Risk

2019 ◽  
Vol 11 (23) ◽  
pp. 6548
Author(s):  
Aharon ◽  
Yagil
Keyword(s):  
Systematic Risk ◽  
Capital Budgeting ◽  
Well Being ◽  
Market Imperfections ◽  
Financial Leverage ◽  
Industrial Firms ◽  
Capital Market Imperfections ◽  
Long Run ◽  
The Impact ◽  
Risky Debt

This paper tests the degree to which a sustainable relationship exists between financial leverage and the systematic risk of shareholders under the following capital market imperfections: corporate and personal taxes as well as risky debt and bankruptcy costs. This beta-leverage relationship has not yet been examined empirically in prior studies nor compared with the theoretical parameter values implied by well-known formulations in the literature. Using data from publicly traded American industrial firms, we found that risky debt models, rather than their corresponding risk free debt models, are more sustainable and appropriate for describing the link between equity beta and financial leverage. Our findings imply that estimating betas or unlevering betas based on risk free debt models might lead to unsustainable and inaccurate estimates of key corporate parameters such as the cost of capital, and may consequently lead to inappropriate capital budgeting decisions. In this respect, the results of this study might have consequences to the recently growing area of sustainable finance in the sense that investment decisions made by different bodies and institutions in the country are more consistent with market imperfections that exist in the economy. In other words, our findings can be in line with a sustainable financial marketplace that contributes to the economic efficiency in the long run and can be related to social well-being.

scholarly journals Impact of Corporate Governance on Investment in SMEs Vietnam

2019 ◽  
Vol 11 (11) ◽  
pp. 59
Author(s):  
Nguyen Thi Kim Chi ◽  
Bui Van Can ◽  
Bui Minh Duc
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Positive Impact ◽  
Small And Medium Enterprises ◽  
Financial Leverage ◽  
Board Chair ◽  
Revenue Growth ◽  
Medium Enterprises ◽  
The Impact ◽  
State Enterprises

Controlling the investment activities of company representatives helps to avoid inefficient investment activities. Shareholders will face with risks if manager’s decisions which not bring benefits to shareholders (according to agency theory). Studying the influence of corporate governance on investment has an important role in controlling investment activities of enterprises. Therefore, the authors analyze the impact of corporate governance on investment of small and medium enterprises (SMEs) in Vietnam from 2014 to 2018. With data collected from 480 small and medium enterprises in Vietnam. The results show that state-owned enterprises tend to invest less than non-state enterprises. Companies with manager is board chair and manager hold shares will make investing more. Revenue growth and financial leverage have a positive impact on investment. From the results of this study, the authors also make some recommendations to help control investment activities in the enterprise through corporate governance characteristics.

scholarly journals Liquidity Risk Management in Banking Sector under the Shadow of Systematic Risk and Economic Dynamics in Pakistan

2019 ◽  
Vol 7 (2) ◽  
pp. 167-183
Author(s):  
Hafiz Waqas Kamran ◽  
Dr. Abdelnaser Omran ◽  
Dr. Shamsul Bahrain bin Mohamed Arshad
Keyword(s):  
Banking Sector ◽  
Systematic Risk ◽  
Key Factors ◽  
Economic Dynamics ◽  
Cross Sectional ◽  
Data Set ◽  
Financial Firms ◽  
Development Indicator ◽  
World Development Indicator ◽  
The Impact

The aim of this present study is to investigate the impact of systematic risk and economic dynamics on liquidity reserve of banking firms in Pakistan. Data for stock return and market return is collected from Data stream, while for all other factors World Development Indicator (WDI) database is selected. The findings of Pooled Regression have suggested that Liquidity Reserves for overall banking Industry of Pakistan significantly affect by Systematic Risk and Key Economic Dynamics. Panel data Models are applied to check whether there is cross sectional heterogeneity in selected financial firms or not. The study period consists of last 15 years 2001-15, due to the availability of the data set. Moreover, other economic indicators like Lending Interest Rate and Inflation can be under observation for the future studies. As per the best perception of researchers, this is the first study in this context, addressing the Liquidity Management and selected key factors.

scholarly journals The Impact of Human Capital on Stocks Performance in Emerging Markets: Evidence From Egypt

2020 ◽  
Vol 10 (1) ◽  
pp. 73
Author(s):  
Walid Abouzeid ◽  
Sharihan Mohamed Aly
Keyword(s):  
Human Capital ◽  
Emerging Markets ◽  
Banking Sector ◽  
The Other ◽  
Common Stock ◽  
General Tendency ◽  
Other Hand ◽  
The Common ◽  
The Impact ◽  
Statistical Results

This study attempts to investigate the impact of human capital on the common stock's return. The population of the study is Egyptian companies listed at the Egyptian exchange (EGX) due to 2014-2018. The statistical results indicate that there is a general tendency to change common stock's hold return to the corporation's human capital, and it is significant at 0.01 levels. In other terms, it can be stated that the corporation's human capital has a significant impact on common stock's hold return in the Egyptian corporation, and according to Adjusted R-squared the corporation's human capital explain a 57.8% from the change common stock's hold return.so; led to the impact of human capital on creating value of common stock. This can be traced back to investing in "the development and researches" on the other hand besides training, therefore medicine and technology companies get affected through these fields of development researches areas; however companies in industrial and banking sector get impacted by training field.

Analysis Of The Impact Of Company Size On Systemic Risk Based On Capital Asset Pricing Model In Food And Beverages Companies Listed On The Indonesia Stock Exchange Year 2009-2011

2021 ◽  
Vol 12 (1) ◽  
pp. 01-07
Author(s):  
Rahmadina Agusti
Keyword(s):  
Asset Pricing ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Systematic Risk ◽  
Capital Asset Pricing ◽  
Company Size ◽  
Manufacturing Companies ◽  
Capital Asset ◽  
Food And Beverages ◽  
The Impact

Before investing, investors should consider the stock beta as a measure of systematic risk. By knowing beta stocks investors can directly determine the sensitivity of the return securities market returns. By knowing the sensitivity return, it automatically investors would be able to assess how much risk it will face when investing their funds in the company's stock. Investors can also adjust the investment that is fit to return they want to earn. This study aim is to determine the impact of company size on systematic risk based capital asset pricing models. Population of this study are all food and beverages manufacturing companies listed (listing) on ​​the Indonesian Stock Exchange from 2009 to 2011. There are 16 companies that fit in the criteria and the sample was 12 companies. Data were analyzed by multiple linear regression analysis. Results of this study showed that the size of the company significant positive effect on the systematic risk with adjusted R square value of 0.994, which means the size of the company has a strong influence in predicting systematic risk.

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