Explaining the effect of leverage on performance through business strategy, competitive intensity and type of debt

• Main Authors: Bernabe, Justine Arianne, Cobarrubias, Ralph, Palma Gil, Rafael Florecito D., Tan, Robin Paolo King
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Financial leverage > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/7691
• Institution: De La Salle University

This study is intended for understanding the way leverage indirectly affects the firm's performance through different factors like: strategy, competitive intensity and, the types of debt which leverage was sourced. Strategies such as product differentiation and cost efficiency are factors that explain the effect of leverage to performance which is due to the fact that debt entails certain restrictions that would be able to constrict managers' investment decisions. The second facet is business competitiveness, because of higher competitive intensity lessens the impact of leverage on returns. Lastly type of debt, whether relational or transactional, due to the fact that different source of leverage have different implications that affect performance. The undertaking of this paper is meant to observe if such conditions also hold true on an entirely different market and geography such as the Philippines.