The Influence of Financial Leverage on the Cost of Capital

Student: Ozdoev Beslan

Educational Programme: Economics (Bachelor)

Year of Graduation: 2017

This study is an analysis of the influence of financial leverage on the cost of capital. The object of the study is companies operating on the Russian and Brazilian markets. As a testing model was chosen Fama-French model with a factor of financial leverage. As a result, the positive influence of financial leverage was found. The additional return for the investor is equal near 14% per year on the Brazil market and 5% of the Russian market. Then was tested the influence of factors of size and capitalization. These factors explain returns on the Brazil market. And on the Russian market factor of size does not explain return. For testing models was used Fama-MacBeth 2 step methodology.

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