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Does Financial Leverage Influence Investment Decisions? Empirical Evidence From KSE-30 Index of Pakistan

Author

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  • Muhammad Sajid
  • Amir Mahmood
  • Hazoor Muhammad Sabir

Abstract

Purpose: The present study investigates the impact of the financial leverage on the investment decisions of the listed companies in KSE-30 Index of Pakistan. It identifies the most important factor that influences investment decision of the company and which causes the bankruptcy of Pakistani listed firms. Methodology: The study uses descriptive statistics, correlation analysis and pooled ordinary least square regression model for the analysis of 30 (financial & non-financial) companies of Pakistan. Results: The empirical findings of the study reported that the financial leverage has a negative and significant impact on the investment decisions. Policy Implications: The outcomes of the study help the strategic management to make financing decisions about leverage whether to take long term debt or not.

Suggested Citation

  • Muhammad Sajid & Amir Mahmood & Hazoor Muhammad Sabir, 2016. "Does Financial Leverage Influence Investment Decisions? Empirical Evidence From KSE-30 Index of Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(2), pages 82-89.
    • Handle: RePEc:asi:ajemod:v:4:y:2016:i:2:p:82-89:id:849
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    Cited by:

    1. Williams Kwasi Peprah & Mensah Morris Ayaa, 2022. "The Convergence of Financial Decision, Business Strategy Through Organisational Competitiveness to Sustainable Competitive Advantage: A Conceptual Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(2), pages 1-87, February.

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