The impact of leverage reduction on the equity risk level of the firm : an exploratory study of French firmsReport as inadecuate




The impact of leverage reduction on the equity risk level of the firm : an exploratory study of French firms - Download this document for free, or read online. Document in PDF available to download.

1 GDF - Gestion, Droit et Finance

Abstract : Although it is admitted that financing decisions affect the equity risk of the firm, few studies have been dedicated to the analysis of the relationship between risk and leverage. In fact, to our knowledge, no study has addressed the question of whether leverage reduction has an effect on equity risk. This exploratory paper addresses this issue using data on French firms. The results of the study show that leverage reduction significantly reduces equity risk. However, an indirect test of the relative importance of this effect indicates that the reduction may not lead to shifts in risk classes. In other words, asset risk is the more important risk factor.

Résumé : Bien quil soit admis que les décisions financières affectent le risque des fonds propres, il y a eu très peu détudes consacrées à lanalyse de cet impact. En effet, à notre connaissance, aucune étude ne sest penchée sur la question de limpact de la réduction de la dette sur le risque des fonds propres. Cette papier exploratoire tente de répondre à cette question avec des données de firmes françaises. Les résultats de létude montrent que le désendettement réduit significativement le risque des fonds propres. Cependant, un test indirect de limportance de cet impact indique que la réduction ninduirait pas un changement de classe de risque. Autrement dit, le risque économique est le facteur le plus important.

Keywords : New technologies resistance to new technologies formal and informal communication communities of practice leverage reduction equity risk beta risk class





Author: Rahim Bah -

Source: https://hal.archives-ouvertes.fr/



DOWNLOAD PDF




Related documents