Abstract
The study aimed at exploring the impact of financial leverage on investment decision to identify the contradictions in theories like Fisher Separation Theorem (1930), MMIrrelevance Theory (1958), and Theory of Investment (1969). A sample of 30 chemical sector companies was taken. Panel regression was applied to check the impact of financial leverage, liquidity, cash flows, profitability, firm size and growth on firm investment decision. Results revealed that financial leverage had a significant negative effect on investment decision, while liquidity, profitability, cash flows and firm size had a positive significant effect on firm investment. The findings imply that investment decision should not be treated separately by finance managers and investors as excessive level of leverage has a drastic effect on investment opportunities.
ZEESHAN MUKHTAR, SHUJAHAT HAIDER HASHMI, MUHAMMAD ASAD. (2016) ARE INVESTMENT AND FINANCING DECISIONS REALLY INDEPENDENT? EVIDENCE FROM CHEMICAL SECTOR OF PAKISTAN, Jinnah Business Review, Volume 4, Issue 1.
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