Leverage Effect Research Articles

Testing event-based day of the week anomaly and trading opportunities: Evidence from Indian sectoral indices

The study is an attempt to examine the day-of-the-week anomaly of fourteen Indian sectoral indices and identify profitable opportunities, considering multiple positive and negative events. The aim of this study is to analyze the day-of-the-week effect on fourteen Indian sectoral indices and find profitable opportunities while considering multiple events that have positive and negative impacts. The study takes into consideration event-based anomalies, both national and global, and provides timing for trading to generate abnormal returns from the market. At first, dummy variable regression analysis was used to understand the initial anomalies. Later, time-varying symmetrical and asymmetrical volatility models, such as Generalized Autoregressive Conditional Heteroscedasticity (1, 1) and Exponential Generalized Autoregressive Conditional Heteroscedasticity (1, 1) were applied to determine the short-term and long-term volatility persistence. These models capture the leverage effect from various events that occurred during the study. The results showed mixed outcomes during multiple positive and negative shocks. After the recession, anomalies were observed across all sectoral indices, except for commodities, energy, and information technology. During the scam period, anomalies occurred in all sectors, except for consumer durables, financial services, and information technology. However, after the new government took over, anomalies persisted in all sectors. During the pandemic, anomalies persisted in all sectors except for finance, IT, pharmaceuticals, and services. Hence, national and global events have shown varied impacts on the Indian markets. The study provides investors with implications on strategies and timing techniques for planning their investments in different sectors of the Indian economy.

The Mediating Role of Dividend Policy on Financial Performance and Firm Value: A Literature Review

Firms or companies are obligated to possess favorable worth in the perception of investors if they desire to establish the trust of various parties to cultivate the confidence to venture and desire to invest in the firm. The notion is held that company worth is capable of illustrating both the present and future financial performance. In addition to financial performance, dividend policies are believed to exert a noteworthy impact on company value. This literature study aims to ascertain whether there exist theoretical explanations that elucidate the link between financial performance and dividend policies, such as the link between financial performance and company value, the link between dividend policies and company value, and the impact of financial performance on company worth with dividend policies serving as a mediating variable. A literature review was conducted by finding and choosing numerous sources to evaluate, including publications accessible in the form of empirical studies papers and literature review papers, books, and conferences. According to the findings of multiple prior study sources utilized in this literature review, the majority of the empirical study’s findings that the authors reviewed suggest that profitability, leverage, and liquidity have an impact on dividend policies. Profitability, leverage, liquidity, and a firm’s size are all factors that impact company value. Dividend policies have an impact on company worth as well. It is also discovered that dividend policies can help to mediate the impact of profitability and liquidity on company value, but they cannot mediate the effect of leverage.
 Keywords: financial performance, firm value, dividend policy

Peran Moderasi ukuran perusahaan pada Determinan Agresivitas Pajak pada Perusahaan Manufaktur yang Terdaftar di BEI

This research was conducted with the aim of testing and analyzing the effect of profitability and leverage on tax aggressiveness moderated by company size partially or moderately. The population in this study were all manufacturing companies listed on the Indonesia Stock Exchange, while the sample that met the sampling criteria for observations was carried out for five years and there were thirty-three manufacturing companies listed on the Indonesia Stock Exchange. This research approach uses associative research. The data collection technique in this research uses documentation techniques and the analysis technique used is MRA Interaction analysis. The research results show that profitability has no effect on tax aggressiveness, leverage has no effect on tax aggressiveness, company size does not moderate the effect of profitability on tax aggressiveness and company size does not moderate the effect of leverage on tax aggressiveness in manufacturing companies listed on the Indonesia Stock Exchange.

Peran Kepemilikan Manajerial dalam Memoderasi Pengaruh Profitabilitas, Leverage, dan Ukuran Perusahaan Terhadap Manajemen Laba

This study is intended to measure the effect of profitability, leverage, and company size impact profit management with managerial ownership in the role of a moderating variable. This study is categorized as quantitative research. The study’s target population on within the sector of mining, which were listed on the Indonesia Stock Exchange from 2019 to 2021. Employing purposive sampling, a sample comprising 30 companies that closely adhered to the criteria was selected, resulting in a dataset of 90 observations. The study relies on secondary data, specifically financial statements from mining sector firms listed on The IDX (Indonesian Stock Exchange), accesible via www.idx.co.id. The analysis of data was conducted through panel data regression analysis, and the processing task involved the utilization of Eviews software. The results revealed that earnings management is positively associated with profitability and negative associated with firm size, earnings management is not affected by leverage. And managerial ownership does not possess the capacity to moderate the relationship between profitability, leverage, and firm size with earnings management.

The Effect of Intellectual Capital, Leverage and Company Size on Profitability and its Impact on Company Value of Sub-Sector Food and Beverage Registered on the Indonesian Stock Exchange Period 2012 - 2022

This study aims to determine the effect of intellectual capital, leverage, and company size on profitability and their impact on company value in the food and beverage sub-sector. This research is quantitative empirical research using hypothesis research that examines the significant influence and direction of the direct and indirect relationship between the independent variables and the dependent variable through the intervening variable. This study used a sample of food and beverage sub-sector companies listed on the IDX for 2012–2022 using a purposive sampling method where 45 companies were obtained from the population and 14 companies were selected according to predetermined criteria. Based on statistical test results, it was found that intellectual capital partially had a negative and insignificant effect on profitability, while leverage and company size had a positive and significant effect on profitability. Partially, intellectual capital, leverage and profitability have a positive and significant effect on company value, while company size has a negative and insignificant effect on company value. Partially, the results of the Sobel Test Path Analysis indirectly mean that profitability as an intervening variable is not able to mediate the influence of intellectual capital and leverage on company value, while directly profitability as an intervening variable is able to mediate the influence of company size on company value.

Forecasting conditional volatility based on hybrid GARCH-type models with long memory, regime switching, leverage effect and heavy-tail: Further evidence from equity market

The properties of clustering, long memory, switching regime, leverage effect and heavy tail in volatility dynamic behavior are induced by important stylized facts in financial markets. There is still a controversy whether incorporating these properties could improve the modelling and forecasting performance of volatility. We construct hybrid volatility models via three perspectives including short memory, long memory and Markov switching GARCH with leverage effect and heavy tail, and empirically compare their performance of in-sample estimation, out-of-sample forecast and risk measurement based on trading data of Chinese equity market index. The out-of-sample forecast results indicate that the FIEGARCH model with innovation distribution of GED outperforms the competing models, and the backtesting results of VaR and ES confirm that this model performs well in the application of risk measurement.

The Dominant Effect of Profitability, Business Risk, Company Size and Leverage on Tax Avoidance with Good Corporate Governance as a Moderator

This study aims to prove which variable has the most dominant influence between the variable Profitability with a proxy for Return on Assets, Business Risk, Company Size/UP and Leverage with a debt-to-asset ratio (DAR) to ETR/Tax Avoidance. Corporate governance moderates variable profitability, business risk, firm size, and leverage with tax avoidance. Twenty-eight manufacturing companies were the object of research and listed on the IDX, and for three years, there were 84 companies as samples. The research method is a quantitative method that is analyzed using statistical applications. Meanwhile, based on statistical data, the results obtained on the variable Firm/UP Size have the most dominant influence compared to those studied on tax evasion. Meanwhile, the business risk variable with the most dominant tax avoidance with good corporate governance as a moderator has a role, while the leverage variable with tax avoidance with good corporate governance has no role. This research has implications in the field of financial ratios and taxation, and for further research

Capital Regulation Reforms and Bank Risk-Taking in China

ABSTRACT Bank capital stands at the heart of banking regulation aimed at curbing bank risk-taking. This paper examines the impact of the Chinese version of Basel III capital regulation on bank risk-taking in China, by applying panel regressions to a large sample of Chinese commercial banks. Our findings indicate that more Tier 2 contingent convertible (CoCo) bonds as capital instruments in the capital composition may paradoxically increase, rather than decrease, bank risk-taking. This effect is robust to instrumental variable estimation. A channel analysis reveals that this unintended effect primarily arises from a leverage effect. This is due to the strong debt attributes of Chinese Tier 2 CoCo bonds, leading to lower core capital levels. Conversely, no evidence is found for the franchise value effect as a significant driver. Lastly, we confirm that capital constraints influence banks’ capital adjustments and asset risk allocation aligning with regulatory aims. Our paper has significant policy implications for financial regulation, shedding light on the efficacy of Basel III capital regulation while highlighting the limitations of Tier 2 CoCo bonds as capital instruments in China.

Does leverage influence the impact of pay gaps on performance in listed retail and mining firms? Evidence from South Africa

PurposeAgency theory motivated this study, posing that leverage mitigates the agency problem. The aim was to examine whether leverage influences the relationship between executive-employee pay gaps (EEPGs) and firm performance. The study was conducted in the mining and retail sectors between 2012 and 2021.Design/methodology/approachTwo EEPGs were featured based on their executive fixed pay and variable incentives accumulation. Proxies of firm performance were headline earnings per share; return on assets; earnings before interest, tax, depreciation and amortisation; and return on stock price. Data were collected from 76 JSE-listed firms in the retail and mining sectors and analysed using the two-step generalised method of moments.FindingsThe results revealed the hybrid implication of the pay gap for firm performance in the retail and mining sectors of South Africa, depending on the performance measures emphasised. More importantly, the study shows that with the moderating effects of leverage, firms can improve their performance while shrinking the pay gap.Practical implicationsThe results have implications for policy addressing income inequality, debt management, executive compensation and regulatory reforms in South Africa concerning productivity and remuneration decisions.Originality/valueThe article provides specific literature for retail and mining industries on pay gaps, shows that it is possible to reduce the pay gap without compromising performance and suggests a new measure of performance that is more attuned to pay gap effect measurement.

The Influence of Profitability, Leverage and Sales Growth on Tax Avoidance in Food and Beverage Sector Companies Listed on the Indonesian Stock Exchange

The purpose of this study are: (1) find out and analyze the effect of profitability on tax avoidance, (2) find out and analyze the effect of leverage on tax avoidance, (3) find out and analyze the effect of sales growth on tax avoidance, and (4) find out and analyze profitability, leverage and sales growth which together have an effect on tax avoidance. The population in this study are all food and beverage companies listed on the Indonesia Stock Exchange as many as 30 companies and the research sample as many as 11 companies with 3 years of observation. Data collection techniques in this study using documentation techniques. The data analysis technique in this study uses the Classical Assumption Test, Multiple Linear Regression, t-test and F-test, and the Coefficient of Determination. Data management in this study uses the SPSS V22.0 Software program. Based on the results of the study, it shows that profitability has a positive and significant effect on tax avoidance, leverage has a positive and significant effect on tax avoidance, sales growth has a positive and significant effect on tax avoidance, and profitability, leverage and sales growth has an effect on tax avoidance.

Spillover and leverage effect in Smart Beta Exchange Traded Funds: Evidence from India

Spillover and leverage effect in Smart Beta Exchange Traded Funds: Evidence from India

STRUKTUR MODAL DAN KINERJA KEUANGAN BANK DI INDONESIA

This research aims to investigate how the capital structure of banks in Indonesia is related to the level of profitability, taking into account company size and the overall impact of the Covid-19 pandemic and whether the increase in capital (debt) provided by the Indonesian government affects bank profitability, providing new results. . considering the increased credit risks resulting from the pandemic. This study fulfills the research objectives by building a broad framework regarding the influence of liquidity, capital adequacy, credit risk, tax protection and ownership structure on bank financial performance. This research uses regression todetermine the effect of leverage, company size and the Covid-19 pandemic on banking profitability. Data for 38 public banks taken from the Bloomberg Terminal in 2014-2021. The research results show that leverage has a positive effect on banking profitability, while company size has a negative effect on leverage and profitability. High debt levels pressure management to meet shareholders' required returns. Large banks prefer risk-free government bonds rather than providing loans to creditors, especially when economic conditions are uncertain. The Covid-19 pandemic has no effect on banking profitability

Ally, deterrence, or leverage in the tripartite game? The effects of indirect stakeholders in historic urban regeneration

The conflict between public and private interests has become a focal point of contention among various parties in the process of expropriation and relocation for historic urban regeneration. Failures to properly resolve such conflict often lead to impeded urban regeneration and/or loss of cultural values. Although previous studies have analyzed the mediating role of various types of indirect stakeholders in historic urban regeneration, they have not further examined various effects of indirect stakeholders. Inspired by the theories of dependence, deterrence, and agency among stakeholders, this study explains the different effects of indirect stakeholders on the three parties (government, developers, and residents) following the evolutionary game theory. Specifically, replicator dynamics equations are established to simulate the evolution paths of the government, developers, and residents in the tripartite game involving indirect stakeholders through a case study for the historic regeneration of Zhongshan Road in Nanning, China. Modeling parameters are obtained through semi-structured interviews and quantified analyses of policy documents. The results reveal that indirect stakeholders (1) show a positive ally effect benefiting the stability of government strategies, (2) have a negative deterrent effect conducive to the stable evolution of developers, and (3) have an indirect leverage effect on the evolution of residents. Our study makes contributions by (1) designing a new indirect stakeholder mechanism to urban regeneration, and (2) establishing a new analysis framework for the tripartite game in urban regeneration. Although the case study is conducted in the context of China, the analytical framework is applicable to other countries.

Exploring urban planning as a lever for emission and exposure control: Analysis of master plan actions over greater Paris

In this paper we set up a modeling chain to study the impact of different urban planning scenarios on air quality and ultimately the exposure of the population. The analysis relates to the intensity of the polluting activities associated with each scenario, as well as their environmental and health impact. The implementation of a 2030 prospective scenario on Ile-de-France allows us to assess the magnitude of the leverage effect of the actions recommended in the regional master plan. The objective is to quantify the importance of emission reductions, but also the gain in terms of exposure to pollutants, which can be obtained when we transcribe into the model the implementation of regulatory texts on the metropolis of Greater Paris. The results allow us to debate the paradox between reducing emissions and increasing the exposure created by situations of high urban densification.

The Effect of Tax Avoidance and Leverage on Company Value: Case Study on a Financial Sub-Sector Service Company Listed on Indonesia Stock Exchange for 2018 – 2022 Period

This study aims to examine the effect of tax avoidance and leverage on company value. The research method used, which uses a quantitative descriptive approach method. Data testing was performed using Panel Data Regression Analysis. This data analysis technique is processed with EViews 12 SV software for Windows. Tax avoidance has no significant effect on the value of the company with a percentage value of 45%. Leverage has a significant effect on the value of the company with a percentage value of -5.51%. The variables Tax avoidance and leverage show prob. (F-statistic) is smaller than 0.05 so that  is rejected so that together (simultaneously) it affects the value of the company.

The Effect of Profitability, Financial Leverage, Firm Size, Dividend Policy, and Stock Value on Income Smoothing in Food and Beverages Companies Listed on Indonesia Stock Exchange in 2020-2022

Income smoothing is the intentional normalizing of profits to a specified level or trend. Smoothing is an attempt by the company's management to lessen anomalous variations in profitability, to the extent permitted by solid accounting and management standards. This study aims to explore the effects of many factors, including stock value, dividend policy, firm size, profitability, and financial leverage, on income smoothing approaches. The population of the study consisted of the 84 food and beverage companies that were listed on IDX between 2020 and 2022. The sampling process provides 20 companies for a three-year observation period using a purposive sample method. Logistic regression analysis is used in the data analysis process using the SPSS 26 program. The study's findings indicate that income smoothing is influenced by all variables at the same time. Variable dividend policies significantly have effect on income smoothing, partially. However, there is no effect between the factors of stock value, company size, profitability, or leverage.

Companies Determinants Of Income Smoothing: Empirical Study Of Property, Real Estate, And Building Construction Sectors Before And In The Time Of Covid 19

This research aims to obtain empirical evidence regarding the effect of financial leverage, profitability, cash holding, and firm value towards income smoothing. Income smoothing is a company’s effort to make earnings less volatile significantly. Stable earnings can be used as a basis for decision-making by stakeholders, while for the company itself, it’s useful for maintaining business continuity and management performance. The object of this research is all companies in the property, real estate, and building construction sector listed on Indonesia Stock Exchange for the 2016-2021 period. Research samples were taken using a purposive sampling method. Secondary data was used in the form of financial reports and stock price information to be tested using the multiple linear regression method. The results of this research are (1) financial leverage has no effect towards income smoothing, (2) profitability has a significant negative effect towards income smoothing, (3) cash holding has no negative effect towards income smoothing, (4) firm value has a significant positive effect towards income smoothing. Financial leverage, profitability, cash holding, and firm value simultaneously have a significant effect towards income smoothing

Pengaruh Likuditas dan Leverage Terhadap Financial Disress Pada Perusahaan Sektor Consumer non-cyclicals Yang Terdaftar pada Indeks Saham Syariah Indonesia di Bursa Efek Indonesia pada tahun 2018-2022 Dengan Profitabilitas Sebagai Variabel Intervening

Financial distress is carried out to get an early warning of bankruptcy. The earlier warning indicators of bankruptcy appear, the greater the opportunity for management to prevent it. This research aims to: (1) identify and analyze the influence of liquidity (current ratio) and Leverage (debt to asset ratio) and profitability (return on assets) on Financial distress; and (2) identify and analyze the influence of liquidity (current ratio) and Leverage (debt to asset ratio) on Financial distress and profitability (return on assets) to mediate their respective influences. Research on non-cyclical consumer sector companies listed on the IDX in 2018-2022. The research population was 119 companies with a sample of 23 companies. The model for determining Financial distress used is the Zmjiweski model. Statistical analysis in this research was assisted by SmartPls Partial Least Square (PLS).Based on the results of the research and discussions that have been carried out, the research results can be concluded that liquidity has a significant and influential effect on Financial distress. Leverage has a significant and influential effect on Financial distress. Profitability has a significant influence on Financial distress and profitability is unable to mediate the influence of liquidity on Financial distress. Meanwhile, profitability is unable to mediate the effect of Leverage on Financial distress.
 
 Keywords liquidity, Leverage, Financial distress, profitability

Pengaruh Firm Size, Political Connection, Gender Diversity, Profitability, dan Leverage Terhadap Water Disclosure pada Perusahaan Sektor Pertambangan yang Terdaftar di Bursa Efek Indonesia Periode 2021-2022

This study aims to determine firm size on water disclosure, the effect of political connection on water disclosure, the effect of gender diversity on water disclosure, the effect of profitability on water disclosure, and the effect of leverage on water disclosure in mining sector companies listed on the Indonesia Stock Exchange for the period 2021-2022. The research sample was 47 mining companies, using purposive sampling technique. Data analysis method with multiple linear regression. The results of this study indicate that, the firm size variable has no effect on water disclosure, the political connection variable has a significant positive effect on water disclosure, the gender diversity variable has no effect on water disclosure, the profitability variable has no effect on water disclosure, and the leverage variable has a significant negative effect on water disclosure. Simultaneously, the firm size variable, political connection, gender diversity, profitability, and leverage affect water disclosure.

The Role of Self Assessment as Moderating Variable in the Effect of Risk Management and Leverage on Financial Performance

The Role of Self Assessment as Moderating Variable in the Effect of Risk Management and Leverage on Financial Performance