Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111048
Authors: 
Nippel, Peter
Year of Publication: 
2001
Series/Report no.: 
Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 549
Abstract: 
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 equity but at the return on shareholders' total wealth. Any relevance leverage may have is definitely due to market imperfections. These may simply cause differences in market access for firms and individuals or lead to agency problems between investors and management.
Subjects: 
Leverage
shareholder value
shareholders' return
JEL: 
G32
Document Type: 
Working Paper

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