Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance

The operating performance of a firm is not directly observable. The earlier researches have shown that criteria such as accounting earnings and cash flows are representatives of unobservable aspects of operating performance. The purpose of this study is to indicate whether changes in financial lever...

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Autores principales:	Ahmad Khodami Pour, Azadeh Esmaeili
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2011
Materias:	changes in financial leverage operating performance stock return value relevance Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/34809cc70ae64a15b169491e56b6aa69
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spelling	oai:doaj.org-article:34809cc70ae64a15b169491e56b6aa692021-11-04T19:41:02ZValue-Relevance of Changes in Financial Leverage For Explaining Operating Performance2008-89142476-292X10.22103/jak.2011.20https://doaj.org/article/34809cc70ae64a15b169491e56b6aa692011-04-01T00:00:00Zhttps://jak.uk.ac.ir/article_20_362a1d42e7443d00b0be0899bcb4004e.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XThe operating performance of a firm is not directly observable. The earlier researches have shown that criteria such as accounting earnings and cash flows are representatives of unobservable aspects of operating performance. The purpose of this study is to indicate whether changes in financial leverage can help us in evaluating performance. This study deals with a different dimension of traditional view that considers financial leverage as a criterion of risk assessment. The method in this research is based on regression analysis to determine the relationship between changes in financial leverage and stock return of a firm regarding as a representative of operating performance of the firm. The statistical population of this study consists of companies accepted in Tehran Stock Exchange in 1378 to 1388. The results of this research indicate that changes in financial leverage provide more information than what is available through traditional criteria. The information content of changes in financial leverage is incremental in comparison with accounting earnings, operating cash flows, and accruals. Although the focus of this study is on the current return, the impact is extended to the next period, because the market does not understand the information content of changes in financial leverage in time.Ahmad Khodami PourAzadeh EsmaeiliShahid Bahonar University of Kermanarticlechanges in financial leverageoperating performancestock returnvalue relevanceAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 2, Iss 6, Pp 65-91 (2011)
institution	DOAJ
collection	DOAJ
language	FA
topic	changes in financial leverage operating performance stock return value relevance Accounting. Bookkeeping HF5601-5689
spellingShingle	changes in financial leverage operating performance stock return value relevance Accounting. Bookkeeping HF5601-5689 Ahmad Khodami Pour Azadeh Esmaeili Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
description	The operating performance of a firm is not directly observable. The earlier researches have shown that criteria such as accounting earnings and cash flows are representatives of unobservable aspects of operating performance. The purpose of this study is to indicate whether changes in financial leverage can help us in evaluating performance. This study deals with a different dimension of traditional view that considers financial leverage as a criterion of risk assessment. The method in this research is based on regression analysis to determine the relationship between changes in financial leverage and stock return of a firm regarding as a representative of operating performance of the firm. The statistical population of this study consists of companies accepted in Tehran Stock Exchange in 1378 to 1388. The results of this research indicate that changes in financial leverage provide more information than what is available through traditional criteria. The information content of changes in financial leverage is incremental in comparison with accounting earnings, operating cash flows, and accruals. Although the focus of this study is on the current return, the impact is extended to the next period, because the market does not understand the information content of changes in financial leverage in time.
format	article
author	Ahmad Khodami Pour Azadeh Esmaeili
author_facet	Ahmad Khodami Pour Azadeh Esmaeili
author_sort	Ahmad Khodami Pour
title	Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
title_short	Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
title_full	Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
title_fullStr	Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
title_full_unstemmed	Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance
title_sort	value-relevance of changes in financial leverage for explaining operating performance
publisher	Shahid Bahonar University of Kerman
publishDate	2011
url	https://doaj.org/article/34809cc70ae64a15b169491e56b6aa69
work_keys_str_mv	AT ahmadkhodamipour valuerelevanceofchangesinfinancialleverageforexplainingoperatingperformance AT azadehesmaeili valuerelevanceofchangesinfinancialleverageforexplainingoperatingperformance
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Value-Relevance of Changes in Financial Leverage For Explaining Operating Performance

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