Does Financial Leverage Influence Investment Decisions? Empirical Evidence From KSE-30 Index of Pakistan

Muhammad Sajid, Amir Mahmood and Hazoor Muhammad Sabir

Asian Journal of Economic Modelling, 2016, vol. 4, issue 2, 82-89

Abstract: Purpose: The present study investigates the impact of the financial leverage on the investment decisions of the listed companies in KSE-30 Index of Pakistan. It identifies the most important factor that influences investment decision of the company and which causes the bankruptcy of Pakistani listed firms. Methodology: The study uses descriptive statistics, correlation analysis and pooled ordinary least square regression model for the analysis of 30 (financial & non-financial) companies of Pakistan. Results: The empirical findings of the study reported that the financial leverage has a negative and significant impact on the investment decisions. Policy Implications: The outcomes of the study help the strategic management to make financing decisions about leverage whether to take long term debt or not.

Keywords: Financial leverage; Investment decision; Panel estimation; OLS regression; KSE-30 index; Pakistan. (search for similar items in EconPapers)
Date: 2016
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