An empirical analysis of financial leverage and financial performance: Empirical evidence from Indian listed firms

Investment Management & Financial Innovations

Mosab I. Tabash¹  Anwar Ahmad²  Eissa A. Al-Homaidi³  Suhaib Anagreh⁴  Nabil Ahmed Mareai Senan⁵ 

[1] Assistant Professor, College of Business, Al Ain University;Assistant Professor, Department of Commerce, Aligarh Muslim University, Aligarh;Assistant Professor, Faculty of Business, Al-Rowad University, Taiz;Assistant Professor,Abu Dhabi School of Management, Abu Dhabi;Associate Professor, Department of Accounting, College of Business Administration, Prince Sattam bin Abdul Aziz University, Kingdom of Saudi Arabia and Administrative Science College, Al-Baydha University;

关键词: capital structure;    firms;    GMM;    India;    liquidity;    panel data;   

DOI  :  10.21511/imfi.18(2).2021.26

来源: DOAJ

【 摘 要 】

The purpose of this paper is to examine the determinants of financial performance, firm liquidity and financial leverage of Indian listed firms. This study uses both static models (pooled, fixed, and random effects) and Generalized Moment Methods (GMM). Financial leverage (FINLE) is defined by the ratio of total liabilities to total assets, whereas the current ratio and the quick ratio are used as firm liquidity factors. Further, a set of financial performance determinants such as return on assets, profit after tax, return on capital employed, return on equity, and Tobin-Q are used as independent factors. The results indicated that profit after tax, return on equity, return on capital employed, and Tobin-Q are the most significant financial success variables that influence financial leverage of Indian listed companies. Furthermore, profit after tax, return on capital invested, return on equity, and Tobin-Q are considered to have a substantial effect on financial leverage among the financial success indicators. In the case of firm liquidity, the findings show that the current ratio and the quick ratio have a substantial effect on the financial leverage of Indian listed companies.

【 授权许可】

Unknown