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FINANCIAL LEVERAGE: CLASSIC AND MODERN APPROACH-CASE STUDY ON THE COMPANIES LISTED ON BUCHAREST STOCK EXCHANGE, EQUIPMENT SECTION

Cristina Morar Triandafil (), Petre Brezeanu () and Catalin Huidumac
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Catalin Huidumac: Academy of Economic Studies, Bucharest

Theoretical and Applied Economics, 2007, vol. 11(516)(supplement)(vol2), issue 11(516)(supplement)(vol2), 339-346

Abstract: This paper focuses on highlighting out the way financial leverage has been approached, both from classic and modern perspective. Literature on financial leverage is reviewed in order to get a deeper insight on the way theories, concepts and mentalities have evolved. From the classic neutral theory according to which the value of the company is independent from its capital structure till the modern one which permits the company to support its growth potential by resorting to external financial resources, leverage was considered to be a key-element of the corporate financial management, especially in the context of the corporate governance mechanisms implementation. The last section contains a case-study made on the equipments section companies listed on Bucharest Stock Exchange in terms of leverage evolution.

Keywords: financial leverage; corporate governance; profitability. (search for similar items in EconPapers)
Date: 2007
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