The Influence of Financial Leverage on the Cost of Capital

Student: Ozdoev Beslan

Educational Programme: Corporate Finance (Master)

Year of Graduation: 2019

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 BRICS markets in 2014-2018. 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 3.5-13.5% per year on the tested markets. Then was tested the influence of factors of size and capitalization. The capitalization factor explains returns on the tested markets. For testing models was used Fama-MacBeth 2 step methodology.

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