T paper examines how the optimal investment in the capacity of flexible and nonflexible resources is affected by financial leverage and, conversely, how a firm’s resource flexibility affects its optimal capital structure. We consider a two-product firm that invests in the optimal capacity of product-flexible and productdedicated resources in the presence of demand uncertainty. Before investing ...

The leverage effect has become an extensively studied phenomenon that describes the (usually) negative correlation between stock returns and volatility. All the previous studies have focused on the origin and properties of the leverage effect. Even though most studies of the leverage effect are based on cross-sectional calibration with parametric models, few of them have carefully studied its e...

Speculative episodes typically involve leverage. For example, the well known tulipmania episode was accompanied by the introduction of foward contracts which allowed speculators to take leveraged positions in tulip bulbs. More recently, the Great Crash of 1929 was exacerbated by leveraged trusts which used leverage to buy stocks. These leveraged trusts could in turn be bought on margin which al...

Abstract Many financial instruments are designed with embedded leverage, such as options and leveraged exchange-traded funds (ETFs). Embedded leverage alleviates investors’ constraints, and, therefore, we hypothesize that lowers required returns. Consistent this hypothesis, find empirically ETFs provide significant amounts of leverage; increases return volatility in proportion to the higher is ...

The purpose of this paper is examining the impact of financial leverage as a mediation variable on the relationship between ownership concentration and financial corporate performance. To test the hypotheses, multiple regression analysis is used. The statistical population of this research is all listed companies in Tehran Stock Exchange. However, data were available only for 60 companies durin...