Abstract
This paper examines the relation between financial leverage and firm performance for a panel of 159,375 (mostly private) non-financial firms in Thailand during the global financial crisis of 2007-2009. We find that leverage is negatively associated with firm performance in the full sample analysis. However, when we divide the sample into domestically-oriented firms and internationally-oriented firms, the effect of leverage on performance is negative for the domestically-oriented firms and is positive for the internationally-oriented firms. In addition, firm size moderates the effect of leverage on performance. That is, for both the domestically-oriented firms and the internationally-oriented firms, the impact of leverage on performance is substantially larger in magnitude for the larger firms than for the small firms.
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