IDEAS home Printed from https://ideas.repec.org/a/ids/ijbglo/v20y2018i1p31-49.html
   My bibliography  Save this article

Causal relationship between leverage and performance: exploring Dhaka Stock Exchange

Author

Listed:
  • Nabila Nisha
  • Bikramaditya Ghosh

Abstract

To magnify shareholders' returns, managers employ the use of debt in the firms' capital structure. However, excessive debt financing can often cause financial distress for the firms. In fact, various debt equity ratio levels may lead to different financial performance when compared for high levered and low levered firms. Thus, the aim of this paper is to examine the cause and effect relationship between financial leverage and financial performance of firms. To pursue the purpose, a purposive sample of 163 non-financial firms listed on the Dhaka Stock Exchange (DSE) was selected to conduct this study. Findings indicate that there was no significant difference in the financial performance between high levered and low levered firms, neither in terms of their size nor growth rates. A negative relationship therefore persists between leverage and performance of such firms. Implications of these findings can provide policy guidelines for managers and directions for any further work in this context.

Suggested Citation

  • Nabila Nisha & Bikramaditya Ghosh, 2018. "Causal relationship between leverage and performance: exploring Dhaka Stock Exchange," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 20(1), pages 31-49.
    • Handle: RePEc:ids:ijbglo:v:20:y:2018:i:1:p:31-49
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=88663
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Evans Opoku‐Mensah & Yuming Yin, 2023. "Controlling shareholders' influence on acquisition decisions and value creation: An empirical study from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1965-1980, April.
    2. Bassam M. Abu-Abbas, Turki Alhmoud, Fatima A. Algazo, 2019. "Financial leverage and firm performance: evidence from Amman stock exchange," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 16(2), pages 207-237, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijbglo:v:20:y:2018:i:1:p:31-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=245 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.