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This paper aims to investigate how the relation between stock returns of US firms and West Texas Intermediate (WTI) oil prices is affected by leverage from 1990 to 2020.

This paper examines how the relationship between stock returns of US firms and WTI oil prices is affected by leverage from 1990 to 2020 using a fixed-effect model estimation framework.

Results from the fixed-effect regression models suggest that leverage effects on stock returns are pervasive both in aggregate and cross-industry levels, while the mining industry is more sensitive. In addition to the positive oil price effects attenuated by leverage at the aggregate level, the authors observe stronger marginal effects of leverage only for the mining sector. Being more exposed to commodity prices, the positive effects of oil prices on stock returns in the mining sector are offset by large debt ratios. Asymmetries, effects of debt maturity structure and implications are also discussed.

This study is grounded on the contemporary cash flow claim of leverage NOT on the long-run effect of leverage considering cash flow constraints. The oil price increase is assumed to represent an advancement of the overall economy. This study does not capture the oil prices response to some other economic forces and vice-versa.

Mining companies should therefore reduce the stock of debt with respect to their assets to make possible the “pass-through” from oil prices to the stock market.

Previously undocumented and the authors show that leverage reduces the total effect of oil prices on stock returns, consistent with the hypothesis. Asymmetric and debt maturity structures effects are also discussed.

The purpose of this study is to examine the evidences of leverage effects on the conditional volatility of exchange rates because of asymmetric innovations and its spillover effects among the exchange rates of selected emerging and growth-leading economies.

The empirical analysis uses the sign bias test and asymmetric generalized autoregressive conditional heteroskedasticity (GARCH) models to capture the leverage effects on conditional volatility of exchange rates and also uses multivariate GARCH (MGARCH) model to address volatility spillovers among the studied exchange rates.

The study finds substantial impact of asymmetric innovations (news) on the conditional volatility of exchange rates, where Russian Ruble is showing significant leverage effect followed by Indian Rupee. The exchange rates depict significant mean spillover effects, where Rupee, Peso and Ruble are strongly connected; Real, Rupiah and Lira are moderately connected; and Yuan is the least connected exchange rate within the sample. The study also finds the assimilation of information in foreign exchanges and increased spillover effects in the post 2008 periods.

The results probably have the implications for international investment and asset management. Portfolio managers could use this research to optimize their international portfolio. Policymakers such as central banks may find the study useful to monitor and design interventions strategies in foreign exchange markets keeping an eye on the nature of movements among these exchange rates.

This is one of the few empirical research studies that aim to explore the leverage effects on exchange rates and their volatility spillovers among seven emerging and growth-leading economies using advanced econometric methodologies.

The purpose of this paper is to examine the relationship between leverage and firm performance using small business data from France by estimating the effects of leverage on both average firm performance and the variance of firm performance.

Focusing on French small- and medium-sized enterprises (SMEs), which tend to be dependent on bank loans, the authors examine the relationship between leverage and firm performance. This study was based on a unique panel data set of more than 2,157 manufacturing SMEs covering the years 2007-2015. The authors estimate the effects of leverage on both average firm performance and the variance of firm performance.

Focusing on the average effects of leverage, the authors find that highly leveraged firms suffer from poor performance. In addition, the variance in firm performance is higher if firms are highly leveraged. Results also underline that leveraged firms are better performers when they have sufficient collateral assets.

The study, however, has also some limitations. The first one is that the findings were obtained for only one industry sector, so attempts should be made to study the issue, as it applies to other sectors as well. Second is the context where the study was conducted. This study has been conducted based on data gathered from SMEs in France within a specific socioeconomic context (2007-2008 global financial crisis), which may also limit the generalizability of the results for different contexts with different socioeconomic situations. It would also be useful, to have a better explanation for the performance of SMEs, to add to the model more financial variables or other types of variables such as those related to managerial skills or to the macro-economic environment. Finally, further research could examine the joint impact of both leverage and ownership structure on firm’s performance as a large number of French firms are family firms. The limitations of this study, however, can in fact be an opportunity for future researchers to conduct studies addressing those limitations.

This research has some implications for small business lending. SME owners and managers may, on the one hand, be encouraged by the fact that collateral assets can reduce agency costs, thereby positively affecting firm performance. On the other hand, high leverage can facilitate firm growth if firms have collateral assets. This implies that policymakers interested in stimulating SMEs should develop more suitable collaterals for high-risk SMEs with low asset tangibility.

The results also have implications for financial institutions. To prevent unexpected and extensive bankruptcies, banks might classify firms with negative cash flows as borrower in danger of bankruptcy. However, the results show that highly leveraged firms with good investment opportunities and high collateral assets reduce the probability of bankruptcy. This implies that banks need to evaluate the credit risk of very highly leveraged small businesses more carefully.

It should be noted that the case of France remains marginal in terms of the conducted studies.

The purpose of this article is to examine how financial distress risk and currency crisis affect the relationship between financial leverage and financial performance.

This study uses data of 200 firms listed on Istanbul Stock Exchange during the period from 2009 to 2019, resulting in 1950 firm-year observations. Pooled ordinary least squares, random effects, firm fixed effects and two-step system GMM models are used to investigate the hypotheses of this study.

The results reveal that financial leverage has negative and significant effect on financial performance, and that this effect is stronger for firms with higher financial distress risk. Furthermore, the findings provide moderate evidence that currency crisis exacerbates the negative association between leverage and performance.

The results of this study have important implications for firms in emerging markets. Managers can enhance firm performance by reducing the level of financial leverage, especially in firms with higher financial distress risk. These firms incur higher debt costs, and then they can benefit more from the decreases in debt ratio in their capital structure. Moreover, the decreases in debt level have more importance in currency crisis times, when the access to external finance becomes more expensive and more difficult.

To the author's knowledge, this research is the first to examine the effect of currency crisis on the financial leverage–financial performance relationship and is one of few that investigate the role of financial distress risk in determining the linkage between leverage and firm performance.

As of 2022, the scope of the engagement and interest of debt capital providers in ESG reporting is mainly untapped. However, a vast amount of literature has produced conflicting findings about the importance of debt capital (leverage) as a factor in sustainability reporting (SR). This is the first meta-analysis reconciling the mixed results of 85 single country studies containing 131 effect sizes across 24,482 firms conducted over past three decades (1999–2022) investigating the influence of leverage on SR. The study emphasizes the significance of contextualizing research by identifying the macro-environmental elements modifying debt's impact on SR, through the use of the institutional theory. Eleven country variables were tested on the collected dataset, spread across 36 countries.

Meta-analysis technique for aggregation of existing extant empirical work. Continuous and categorical variable-based moderator analysis to demystify the influence of country characteristics affecting the leverage–SR relationship.

Results show positive significant impact of debt capital providers on SR. Country's level of development, GDP, extent of capital constraints in a country, financial sector development within a nation, country governance factors and corruption levels, country's culture, number of sustainability reporting instruments operational in a country and geographical location proved to be significant moderators.

The study details relevant meaningful research gaps, worthy of uptake by researchers to produce targeted research.

Governments must increasingly go beyond their mandated disclosure role and acknowledge the important institutional factors that have contributed to the expansion of ESG reporting through the creation of nation-specific tools, incentive structures and disclosure-encouraging regulations. To secure a steady flow of funding and prevent negative effects on company value and cost of capital in the midst of prolonged global economic upheaval, businesses must address the information requirements of lenders. The limited total effect size emphasizes the necessity for debt providers to step up their ESG activism and exercise their maximum power and potential in stimulating extensive SR firm-level practices.

The present study is the first meta-analysis reconciling the mixed results of 85 single-country studies containing 131 effect sizes across 24,482 firms conducted over the past three decades (1999–2022) investigating the influence of leverage on SR and demystifying the macro-environmental factors affecting the leverage–SR association.

The purpose of this study is to explore the impact of household leverage on consumption in Denmark during the Great Depression in the 1930s.

A range of consumption functions are estimated on the basis of household-level data from the Expenditure and Saving Survey of 1931.

The estimations show significant negative marginal effects of various measures of leverage on homeowners’ non-durable consumption. The magnitude of the estimated effects suggests that leverage contributed significantly to the economic downturn during the Great Depression by depressing consumer spending of homeowners.

Gross debt levels of homeowners are not only of direct importance for financial stability but also have implications for macroeconomic stability, which again might affect the stability of the financial system. These findings seem to be in line with the focus on household leverage in the macroprudential oversight performed by regulators and central banks in many countries.

This paper is the first study of the leverage channel in the private consumption function using household micro data from the Great Depression.

The purpose of this paper is to argue that strategic responsiveness is of paramount importance for effective risk management outcomes and to introduce an empirical study to demonstrate this.

Real options logic is adopted to explain how effective risk management capabilities improve performance and how innovation and financial slack enhance this effect. The propositions are examined across 896 companies using two‐stage least square regressions.

The study reveals that risk management effectiveness combines both the ability to exploit opportunities and avoid adverse economic impacts, and has a significant positive relationship to performance. This effect is moderated favorably by investment in innovation and lower financial leverage.

The analysis is based on a sample of large firms, which may affect the generalizability of results. Nonetheless, the study shows that effective risk management capabilities differentiate the firms and determine success and failure. It further underscores the importance of combined innovation policy and capital structure decisions as firms deal effectively with risk and uncertainty.

The findings indicate that corporate management must consider commitments for innovation and financial slack to enhance positive risk management effects. This result is in dire contrast to traditional beliefs that tighter resource management and higher financial leverage lead to better economies.

This is one of few studies to explicitly consider strategic responsiveness as instrumental for effective risk management outcomes while investigating the economic effects associated with the ability to combine generation of upside gains and downside loss avoidance.

This study aims to analyze the impact of corporate governance on firms’ external financing decisions in the Middle East and North Africa (MENA) region.

The authors analyzed a unique set of panel data comprising 2,425 nonfinancial firms whose shares are traded on stock exchanges in countries in the MENA region. The authors fitted an ordinary least squares model to estimate the regression coefficients. The authors performed a sensitivity analysis using alternative measures of the critical variables and an endogeneity analysis using instrumental variable methods with plausible external instruments.

The results revealed that corporate governance characteristics of firms are strongly associated with their degree of leverage. They also showed that macrofinancial conditions, financial regulations, corporate governance enforcement and social conditions mitigate the impact of corporate governance on firms’ financing decisions.

A larger sample size will further improve the results; however, this is difficult and depends on the extent to which increasing disclosure practices allow more corporate information to reach international databases.

This study provides new evidence on the role of corporate governance on firms’ financing decisions and documents the essential mitigating role of institutions, alerting managers to consider them.

This study is a novel attempt. Based on information from different data sources, this study explored the predictive power of corporate governance, ownership structures and other firm-specific characteristics in explaining corporate leverage in MENA countries. Overall, the analysis provides new evidence of the association between corporate governance and capital structure in the MENA region, highlighting the critical role of institutions.

The purpose of this paper is to investigate how the structure of both CEO and non-CEO executive compensation affects the overall risk of a firm. The author focuses on the interplay between CEO and non-CEO executive compensation structure.

The author uses a hand-collected pension-database that employs both OLS and two-stage least squares regressions to determine the effects of inside debt on default risk using the distance-to-default framework. The database consists of 8,965 executive-year data points from 272 firms.

This paper accomplishes three major objectives: first, the author presents a significant extension of Sundaram and Yermack (2007) by including non-CEO executives; the author demonstrates how the differences in inside debt between CEO and non-CEO executives are directly related to firm risk; and that funding these pensions via a Rabbi Trust eliminates most of the risk-shifting effects. Firms with the lowest compensation leverage gap between CEO and non-CEO executives were most likely to observe the agency costs associated with high executive leverage. When compensation leverage structures were substantially different, or the pension was pre-funded, these effects are neutralized.

To the best of the author’s knowledge, the first paper addresses the effects of Rabbi Trusts on risk-shifting behavior between both CEOs and non-CEO executives. Further, the author extends Sundaram and Yermack (2007) using a hand-collected database six times larger than the original paper. By focusing on the “leverage gap” between CEOs and non-CEO executives, the author presents unique evidence that underlines the risk dynamics between CEOs and their boards.

In many societies, environmental problems have had some negative impacts on both social and economic features with issues like capital structure seriously affected. In this write-up, an attempt has been made to pinpoint the influence of the combined effects of integrated reporting and financial leverage on the value of a firm. In most emerging markets, investment is heavily dependent on foreign capital inflow which is mainly in the form of financial leverage. It is, therefore, necessary to know how this shapes the net worth of firms in which they are invested. Shareholders' fund is a major factor in determining the level of investment and economic stability of a nation and consequently improvements in sustainable development. Hence, the moderating role of financial leverage in the integrated reporting-shareholders’ funds relationship aims to warrant this research.

All listed firms on the Nigerian Stock Exchange (NSE) as of 31st December 2021 were affected by this research. Filtering resulted in the use of 77 companies as a sample for the study covering a period of 12 years (2010–2021) with a total of 788 observations. Analyses of data were done through line graphs to show the trend and flow of disclosures between 2010 and 2021. Furthermore, linear regression was also applied to help determine the multiple effects of financial leverage and integrated reporting on shareholders' funds.

The outcomes showed that economic disclosure was 100% throughout the period of observation as opposed to environmental and social disclosures which, fluctuate throughout the period with an average of slightly over 55%. It was also discovered that a low but significant financial leverage moderated the interaction of integrated reporting on shareholders' funds.

Stakeholders and policymakers should, therefore, put in place rules, regulations, standards, structures and administrative networks to enable firms to comply with local rules, guidelines and upgraded standards of international worth on sustainability issues.

This research explores the problem of the effects of integrated reporting on investment capital as it affects developing economies. Results from this study could go a long way in narrowing the lack of interest in sustainability issues by prospective investors coupled with the low level of environmental and social reporting by firms in African economies that are mostly underdeveloped.