Topics In Finance Part III - Leverage

Main Article Content

Judy Laux

Keywords

operating leverage, financial leverage, stockholder wealth maximization, agency theory

Abstract

This article investigates operating and financial leverage from the perspective of the financial manager, accenting the relationships to stockholder wealth maximization (SWM), risk and return, and potential agency problems. It also covers some of the pertinent literature related specifically to the implications of operating and financial risk and the associated measurement dilemmas.

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