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Leverage Structure Dynamics and Firm Value: Evidence From Bangladesh

Mohammad Nazim Uddin, Mohammed Shamim Uddin Khan, Mosharrof Hosen and Md. Shahnur Azad Chowdhury
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Mohammad Nazim Uddin: International Islamic University, Chittagong, Bangladesh
Mohammed Shamim Uddin Khan: University of Chittagong, Bangladesh
Mosharrof Hosen: UCSI University, Malaysia
Md. Shahnur Azad Chowdhury: International Islamic University, Chittagong, Bangladesh

International Journal of Asian Business and Information Management (IJABIM), 2022, vol. 13, issue 1, 1-18

Abstract: The paper aims to examine the impact of leverage structure dynamics on firm value in Bangladesh. To this end, the panel techniques (GMM and PCSE) were used to control for serial correlation, heteroskedasticity, and cross-sectional difficulties in the panel data set. The paper found that leverage structure influences firm value. The result also supports the trade-off theory, which asserts that tax savings on interest expenses result in a lower total cost of capital and ultimately upturn firm value. Lastly, the paper highlights the significance of endogenous variables such as liquidity, profitability, tangibility, and tax rate on firm value in Bangladesh.

Date: 2022
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