The Impact of the Degree of Operating Leverage on Stock Returns: An Empirical Study in the Brazilian Market

Medeiros, Otávio Ribeiro de; Lustosa, Paulo Roberto Barbosa; Dantas, José Alves

doi:10.2139/ssrn.891846

Cited by 7 publications

(9 citation statements)

References 23 publications

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“…Prior studies related to the effect of operating leverage on financial performance are limited and also have reached inconclusive results. Medeiros et al (2006) examined the effect of operating leverage on the stock returns of firms listed on the Brazilian Stock Market during [2001][2002][2003][2004]. They found that operating leverage positively affects stock returns.…”

Section: Literature Reviewmentioning

confidence: 99%

Faaliyet Kaldıracının Finansal Performans Üzerindeki Etkisini Belirlemede Satış Büyümesinin Rolü: Türkiye Örneği

Kalash¹,

Bilen

2021

Muhasebe Ve Finansman Dergisi

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This article analyses the impact of sales growth on the association between operating leverage and financial performance. Using a sample of 200 firms listed on Istanbul Stock Exchange over the period from 2008 to 2017, we find that operating leverage has a negative effect on profitability, and that the negative effect of operating leverage is stronger (weaker) for firms with low (high) sales growth. It implies that sales growth mitigates the negative impact of operating leverage on profitability. These results confirm that firms with high operating leverage should increase sales level to enhance their financial performance.

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Section: Literature Reviewmentioning

confidence: 99%

Faaliyet Kaldıracının Finansal Performans Üzerindeki Etkisini Belirlemede Satış Büyümesinin Rolü: Türkiye Örneği

Kalash¹,

Bilen

2021

Muhasebe Ve Finansman Dergisi

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“…Hence, their study provides direct, albeit anecdotal, evidence of a positive Beta -DOL relation. Medeiros et al (2006), assume that OL follows a random walk and assert that since earnings are correlated with returns, firms with greater yearly changes in OL will exhibit greater volatility in returns. Following Mandelker and Rhee (1984) they estimate DOL as the coefficient from a time series regression of the natural log of earnings before interest and taxes on the log of net operating revenues.…”

Section: Literaturementioning

confidence: 99%

The operating leverage impact on systematic risk within a context of choice

2012

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Purpose -Strategic cost structure choices determine how firms divide operating costs between fixed and variable components, and therefore have important implications for financial performance. The purpose of this paper is to examine the effect of operating leverage on equity Betas when managers have discretion over firms' cost structures. Design/methodology/approach -Using panel data for publicly listed trucking firms over years 1994-2006, market model Betas are regressed on controls and alternatively measured proxies for operating leverage: degree of operating leverage, assets in place and percentage of company employed drivers. Findings -Results of this study generally show positively significant coefficients on all three operating leverage variables. Originality/value -Operating characteristics of many industries require that firms make substantial investments in long-lived assets that result in high fixed costs (e.g. depreciation), and for these firms cost structure is exogenously or technologically constrained leaving managers with little discretion. In contrast to these types of firms, the authors examine the effect of operating leverage (OL) on Betas when managers have discretion over firms' cost structures. Trucking firms are a particularly interesting industry group for analyzing the impact of operating OL choices on Beta because distinct strategic cost structure choices are available to the management of trucking firms that result in various degrees of OL throughout the industry.

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“…Tabari (2010) menyatakan bahwa leverage berpengaruh terhadap stock return. Berbeda dengan penelitian yang dilakukan oleh Medeiros (2005) menyatakan bahwa operating leverage tidak memberikan kontribusi terhadap return saham karena perusahaan-perusahaan yang diteliti bukanlah perusahaan-perusahaan yang modalnya sangat tinggi dan memiliki tenaga kerja uang sedikit. Sambora (2013) menyatakan bahwa leverage dan profibilitas terhadap nilai perusahaan yang terdaftar di bursa efek Indonesia periode 2011-2015 mentayakan bahwa secara parsial leverage tidak signifikan berpengaruh terhadap harga saham, sedangkan secara simultan leverage mempunyai pengaruh secara signifikan terhadap harga saham.…”

Section: Pendahuluanunclassified

“…Hasil penelitian ini tidak didukung oleh Medeiros (2005), mengenai pengaruh Operating leverage terhadap return saham pada pasar bursa di brazil menyatakan bahwa operating leverage tidak memberikan kontribusi terhadap return saham.…”

Section: Leverage Dan Stock Returnunclassified

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Analisis pengaruh financial leverage dan operating leverage terhadap stock return

Syaifullah

2018

INOVASI: Jurnal Ekonomi, Keuangan dan Manajemen

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This study aimed to examine the effect of financial leverage and operating leverage on stock return. The population of this study were 135 industrial manufacturing company listed on the Indonesia Stock Exchange (IDX) with a sample of 11 companies during the years 2011-2015. This study used purposive sampling method. The data analysis technique used in this study is multiple regression analysis. The results of this study concluded that concludes that the financial leverage and operating leverage no significant effect on stock return. While partially operating leverage effect on stock return, but no effect of financial leverage on stock return.

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The Impact of the Degree of Operating Leverage on Stock Returns: An Empirical Study in the Brazilian Market

Cited by 7 publications

References 23 publications

Faaliyet Kaldıracının Finansal Performans Üzerindeki Etkisini Belirlemede Satış Büyümesinin Rolü: Türkiye Örneği

Faaliyet Kaldıracının Finansal Performans Üzerindeki Etkisini Belirlemede Satış Büyümesinin Rolü: Türkiye Örneği

The operating leverage impact on systematic risk within a context of choice

Analisis pengaruh financial leverage dan operating leverage terhadap stock return

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