NEXUS BETWEEN FINANCIAL LEVERAGE AND SHARE PRICE: EVIDENCE FROM AUTOMOBILE SECTOR LISTED AT PAKISTAN STOCK EXCHANGE

Authors

Keywords:

Share Price, debt ratio, degree of financial leverage, firm size, ordinary least square, automobile sector

Abstract

Investors are very sensitive for their investment as they keep eyes on the performance of the company and price of the share. The aim of this paper is to depict the effects of financial leverage on share price of the automobile sector companies listed at Pakistan Stock Exchange. The data type is panel for the period of fifteen years from 2004 to 2018; analyzed through Descriptive Statistics, Panel unit root test, and Ordinary least square Random effects model to determine the relationship between dependent and explanatory variables. The results found that debt ratio has significant negative relationship with share price, and the degree of financial leverage has significant negative relationship with share price. It concludes that more debt in capital structure is not beneficial for share price, and size.

Author Biographies

Maria Tufail Memon, University of Sindh, Jamshoro

Maria Tufail Memon is a research scholar and currently doing her PhD at the University of Sindh Jamshoro. She has completed her MPhil in Management Sciences from Muhammad Ali Jinnah University Karachi, in 2019.

Tayyaba Rafique Makhdoom, University of Sindh, Jamshoro

Dr. Tayyaba Rafique Makhdoom has been serving as an Assistant Professor at Sindh University Laar Campus Badin Pakistan for 12 years. She earned her PhD degree in Business Administration from University of Sindh Jamshoro Pakistan. 

Nadia Naz, Muhammad Ali Jinnah University, Karachi

Nadia Naz is an MS Scholar at Department of Management Sciences, Muhammad Ali Jinnah University, Karachi.

Muhammad Shoaib, Sindh University Laar Campus Badin

Muhammad Shoaib is a BBA Student at Sindh University Laar Campus Badin

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Published

31.12.2021

Issue

Vol. 7 No. 2 (2021): Sarhad Journal of Management Sciences (SJMS)

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