Impact of Financial Leverage on the Value of Firm: Evidence from Some NSE Listed Companies

Subha Ranjan Dutta1, Tutun Mukherjee2 & Dr. Som Sankar Sen3

1Research Scholar, Department of Commerce, The University of Burdwan And Assistant Professor in Commerce, Shibpur Dinobundhoo Institution (College), Howrah, West Bengal, India. E-mail:shubharanjan_dutta02@rediffmail.com

2Research Scholar, Department of Commerce, The University of Burdwan And Assistant Professor in Commerce, Shree Agrasain College, Liluah, West Bengal, India. E-mail: tutunmukherjee2@gmail.com (Corresponding Author)

3Assistant Professor in Commerce, The University of Burdwan, West Bengal, India. E-mail: somsankarsen@gmail.com

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Abstract

The purpose of this paper is to investigate the impact of financial leverage on firm’s value. For this purpose 31 NSE listed companies have been taken as a sample size from six different sectors. The study employed Fixed Effect (within) Regression Model as suggested by Hausman Test to find out the impact of financial leverage on firm’s value. [All calculations have been done using STATA 13 and XLSTAT 2016 software]. The findings of the study reveals that there lay a significant negative relationship between Degree of Financial Leverage and the value of firm after controlling the variable Firm’s Size.

Keywords: Financial Leverage, Value of Firm, Fixed Effect (within) Regression Model, Control Variable, Firm Size