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Testing the Leverage Effect for the Companies Listed on the Capital Market


  • Andrei Stănculescu

    (Academy of Economic Studies, Bucharest, Romania)

  • Petre Brezeanu

    (Academy of Economic Studies, Bucharest, Romania)


The financial theory admits that levered firms record a value surplus compared to unlevered firms, at least because of the tax savings, related to interest. A series of fundamental studies indicate this phenomenon. However, incurred debt, especially the long term debt, has a more consistent influence on performance, as stated by the Modigliani-Miller model. To this respect, the paper proposes the empirical testing of this model, using financial-accounting data of firms listed on the Romanian capital market. In particular, the statistical significance of the leverage effect will be analyzed, on a sample of companies listed on the Bucharest Stock Exchange.

Suggested Citation

  • Andrei Stănculescu & Petre Brezeanu, 2009. "Testing the Leverage Effect for the Companies Listed on the Capital Market," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(4), pages 249-256.
  • Handle: RePEc:pet:annals:v:9:i:4:y:2009:p:249-256

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