What is the effect of debt on the firm financial performance? / Thomas GRIFFON / 2022

Titre : What is the effect of debt on the firm financial performance? Type de document : Mémoire Auteurs : Thomas GRIFFON, Auteur Année de publication : 2022 Importance : 34 p. Note générale : Pour accéder aux fichiers PDF, merci de vous identifier sur le catalogue avec cotre compte Office 365 via le bouton CONNEXION en haut de la page. Langues : Anglais (eng) Mots-clés : Management DETTE ; CAPITAL ; INDICATEUR Entreprise PERFORMANSE Résumé : Considering the impact of a company's indebtedness on its financial performance is an important issue in the choice of financing. There are theories about the positive link between leverage and financial performance (return on asset and return on equity). We hypothesized that leverage would have a positive effect on financial performance. In fact, theorists have proposed models in imperfect markets. The value of a leverage firm is equal to the value of the unlevered firm plus the tax savings allowed by the debt. In addition, debt is a disciplinary means to fight managerial entrenchment. However, debt, despite its advantages, can cause significant financial distress cost. In this essay, we will look at the impact of debt on the firm financial performance.To test this hypothesis, we selected a sample of 206 oil companies and their financial data between 2014 and 2020. However, the empirical results went in the opposite direction of our initial hypothesis. There is a negative correlation between leverage, return on asset and return on equity for the sample. The regression model supports this with a negative linear regression coefficient. Finally, we found a positive relationship between leverage and dividend yield. The possible conclusion is that these 206 oil companies take on debt to pay dividends to their shareholders. Programme : PGE-Reims Permalink : https://cataloguelibrary.neoma-bs.fr/index.php?lvl=notice_display&id=571597