Journal of Finance and Bank Management

Myth vs. Fact; Influence of Financial Leverage on Shareholder’s Return (An Empirical Study of SugarSector of Pakistanfrom Year 2005-2010)
Mr. Ahmed Muneeb Mehta

Abstract
In this article the influence of financial leverage on shareholder’s return is studied. Financial leverage describes how much amount of debt is used by a firm. Financial leverage increases with increase in debts. It increases the financial risk of the company as well as increases the opportunity for the firm to earn more by efficiently utilization of these resources. This high risk increases the expectation of the shareholder’s to earn more return on equity. The present research paper explores the effect of financial leverage on shareholder’s return. Financial leverage is taken as independent variable and Shareholders’ Return as dependent variable. For this study, sugar industry of Pakistan is used. Data is used for the period of 2005-2010. All 35 listed companies of sugar industry are used for this study. Panel data procedure is used to see the influence of financial leverage on shareholder’s return.

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