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Leverage and Returns in Three Countries of Southern European Region

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  • Panayotis Artikis
  • Georgia Nifora

Abstract

This paper aims to investigate the impact of leverage on stock returns in three southern European countries, members of the Euro zone, Greece, Italy and Portugal from 2000 to 2010. The portfolio level analysis is performed both on a full sample basis and on an industry basis. The main contribution of our work is that we enhance the capital structure studies by broadening the limited work that has been accomplished on the base of leverage as an explanatory variable of returns. At the industry level analysis, a significant positive leverage effect is isolated only at Consumer Goods and Health Care industries in Italy and at Industrial sector in Portugal. In Greece, the industry effect of leverage is almost negligible.

Suggested Citation

  • Panayotis Artikis & Georgia Nifora, 2011. "Leverage and Returns in Three Countries of Southern European Region," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 3-26.
    • Handle: RePEc:ers:journl:v:xiv:y:2011:i:4:p:3-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Asset Pricing; Fama-French; Leverage; Industry; Beta; Price Earning Ratio; Book-to-Markets Ratio; Size; Momentum; Market Risk Premium; Milan Stock Exchange;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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