Impact of Financial Leverage on Shareholders Return and Financial Performance: Evidence from Top 100 Listed Companies in National Stock Exchange

Abstract

Financial management’s key objective is to enrich capital structure and financial decisions. The vital issue during capital structure decision-making is determining a firm’s proper balance of owed and owned capital. One globally accepted issue is financial leverage, popularly known as the “Double-edged Sword”. It can maximize the shareholders’ benefit and boost the company’s financial performance and vice versa. So an effort made “to find out the impact of financial leverage on shareholders return and financial performance of Top 100 National Stock Exchange companies in India”. National Stock Exchange registered companies as per market capitalization were obtained. The Descriptive Statistics, Panel-Data Regression Analysis (Breusch-Pagan LM Test, Hausman Test) and Structural Equation Model (SEM) were analyzed from 2017 to 2021. The Outcome illustrates that DER has a positive influence on ROE, CR and NPR which relating to the “Trade-off Theory”. DER has negative impact on EPS, ICR and TATR supporting “Pecking order Theory”. The framed empirical SEM act as a theoretical contribution to the future researchers.