What is it about?
This research examines the propositions of Campbell et al. (2008) and Mirza et al. (2013) on the pricing of leverage in stock returns of firms listed on the Karachi Stock Exchange (KSE) over a period 2001 to 2013.
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Why is it important?
These findings of this study have global relevance, notably for other emerging and developing economies where default risk is of importance due to cyclical nature of cash flows and low recovery rates owing to weaknesses of legal structure.
Perspectives
The results of this study confirm the notion of leverage premium and have important implications for financial managers, investment analysts and other market participants who use asset pricing frameworks for investment appraisals.
Dr Krishna Reddy
University of Waikato
Read the Original
This page is a summary of: Financial leverage and stock returns: evidence from an emerging economy, Economic Research-Ekonomska Istraživanja, January 2016, Taylor & Francis,
DOI: 10.1080/1331677x.2016.1160792.
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