Impact of Financial Leverage on Financial Performance Firm Value and Shareholders Return of Select Manufacturing Companies in India

Abstract

Financial management s key objective is to enrich capital structure and ensure newlinewise financial decisions. The corporate financial management is in a position to inculcate newlineappropriate debt and equity mix to to attain Optimum Capital Structure. The vital issue newlineduring capital structure decision-making is determining a proper balance of owed and newlineowned capital. One globally accepted issue is financial leverage, popularly known as the newline Double-edged Sword . It can maximize the shareholders benefit, boost the financial newlineperformance, firm value and vice versa. For this, the impacts of financial leverage need newlineto be considered with care. So an effort is made To analyze the impact of financial newlineleverage on financial performance, firm value and shareholders return of the selected newlineManufacturing Companies in India . The research study includes thirty companies newlinebelonging to Manufacturing Industry in India. The Manufacturing Companies selected newlineare from Automobile, Chemical, and Pharmaceutical industries. The top ten companies newlinebased on Average Market Capitalization, listed on BSE and NSE from each industry newlinewere taken as samples. The Descriptive Statistics, Correlation, Multiple Regression, newlinePanel Data Regression Analysis (Breusch-Pagan LM Test, Hausman Test and Wald newlineTest), Compound Annual Growth Rate and Trend Analysis were the tools used to newlineanalyse the data from 2007 to 2021. The study by adding to the existing literature, act as newlineas a theoretical contribution to the future researchers. The outcome illustrates that newlineInterest Coverage Ratio has a positive impact on the framed objectives relating to the newline Trade-off Theory . Financial Leverage Ratio and Debt Equity Ratio have negative newlineimpact on financial performance, firm value and shareholders return supporting newline Pecking Order Theory .