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Financial leverage: The impact on Swedish companies’ financial performance
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
2017 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Background: Swedish companies were negatively affected by the financial crisis between 2007 to 2009. Even if companies with a high level of financial leverage were hit harder due to the financial crisis than companies with financial leverage, the level of financial leverage about the same now as it was right before the financial crisis. Even if an increase of cash flows associated to financial leverage increase a company’s business opportunities, there are a lot of research done in the field that claim that the relation between financial leverage and financial performance is negative.

Purpose: Since there is evidence that the relation between financial leverage and financial performance differ from different countries across the world, it is important to determine the relation in different countries. There is a research gap when it comes to the relation in Sweden, since the prior research have focused on specific industries or company sizes. By extending prior research in Sweden, companies, investors and creditors could get better understanding for Swedish companies’ relation between financial leverage and financial performance.

Method: In the thesis, data from 750 companies listed on Stockholm stock exchange has been examined to determine the relation between financial leverage and financial performance. Totally, 3750 observation from the years 2012 to 2016, have been tested by a multivariate regression.

Results: The evidence from the thesis showed that the relation between financial leverage and financial performance depends on which type of measurement for financial leverage and financial performance that is used. There is partly significant evidence that company size affect the relation

Place, publisher, year, edition, pages
2017. , p. 70
Keywords [en]
Financial leverage, Financial performance, Return on Assets, Return on Equity, Sweden
National Category
Business Administration
Identifiers
URN: urn:nbn:se:lnu:diva-67482OAI: oai:DiVA.org:lnu-67482DiVA, id: diva2:1136627
Subject / course
Business Administration - Management Accounting
Educational program
Business Administration and Economics Programme, 240 credits
Supervisors
Examiners
Available from: 2017-08-29 Created: 2017-08-28 Last updated: 2017-08-29Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf