Business, Management and Accounting
4 years ago

High leverage in textile sector leads to lower stock returns in Pakistan.

Impact of Leverage on Stock Return (A case study of textile sector of Pakistan Stock Exchange)
Hameed Rehman, Naveed, Muhammad Amir, Muhammad Mudassir Anwar, Benish Malik

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The article examines how debt levels affect stock returns for textile companies in Pakistan from 2013 to 2018. They found that higher debt compared to equity is linked to lower stock returns, while better interest coverage is linked to higher stock returns. This means that investors may not get as much return as they expect from high-risk, high-debt companies. This study supports previous research showing that leverage plays a crucial role in determining stock returns for firms in the textile sector of Pakistan Stock Exchange.