Jacquier, Éric; Titman, Sheridan; Yalçin, Atakan - Centre Interuniversitaire de Recherche en Analyse des … - 2009
Via the well-known financial leverage effect, decreases in stock prices cause an increase in the levered equity beta … literature focuses on the financial leverage effect. This paper examines both effects. Our empirical results show that, contrary … to common belief, the operating leverage effect largely dominates the financial leverage effect, even for highly levered …
