On the irrelevance of the leverage effect

Research, Preprint OPEN
Nippel, Peter;
(2001)
  • Publisher: Kiel: Universität Kiel, Institut für Betriebswirtschaftslehre
  • Subject: Leverage | shareholder value | G32 | Leverage,shareholder value,shareholders' return | shareholders' return
    • jel: jel:G32
      ddc: ddc:650

Financial leverage increases the expected return on equity. We show that this leverage effect is not only irrelevant for shareholders' present wealth but also for the return on their investments. This result is straightforward if we do not only look at the return on equ... View more
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