IMPACT OF LEVERAGE OR DEBT MANAGEMENT ON STOCK RETURNS: EMPIRICAL EVIDENCE FROM FUEL &ENERGY & TEXTILE SECTOR OF PAKISTAN
Journal Title: Academic Research International - Year 2017, Vol 8, Issue 1
Abstract
The ultimate objective of every business organization is to manage risk and maximize the returns. This paper aim to investigate the impact of debt/leverage management on stock returns of listed companies on Pakistan Stock Exchange. For the current research the data has been collected from Fuel & energy sector and Textile sector of Pakistan for the period 2006-2011. The financial ratio analysis technique was used to measure debt management while annual stock returns were collected from the PSE website. 5 financial ratio which were used in current study to calculate debt management predominantly included Net debt to EBITDA, Net debt to Equity, Interest coverage Ratio, Asset to Equity and Cash flows from operations to Net Debt. SPSS 20 version was used to examine the data and Pearson correlation & Ordinary Least Square regression analysis were performed to estimate the results. Findings demonstrated that more the organizations focus on leverage management, more would be the stock returns of the companies. The research also includes the recommendations for the future researchers.
Authors and Affiliations
Zaib Maroof
Keywords
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