Does Financial Leverage Impact the Financial Performance of Pharmaceutical Companies in Bangladesh?
Purpose: This study aims to examine the impact of determinants of leverage on the financial performance of pharmaceutical companies in Bangladesh. Design/Methods/Approach: This study covers a data-set of 24 companies, which are chosen based on their availability of data. The study sets 13 variables consisted of 3120 observations for the period of 10 years, which are processed using financial ratios and followed by previous literature. After that we used the panel regression model to analyze the data to serve the study purpose. Findings/Results: The study after analysis finds that the debt-equity ratio had a significant impact on the financial performance of pharmaceutical companies as measured by EPS, which is adopted by packing order theory. Additionally, the long-term debt ratio showed a significant impact on the profitability of the same companies. Besides the given findings, firm size had been a significant issue to lead the financial performance of pharmaceutical companies in Bangladesh. Practical Implications: The findings of the study are more useful to the professional practices of financial managers, policy makers, decision-support, and industrial initiators, who are endeavors to develop the industry. Originality/Value: The study initially bears an innovative value to adopt financial strategy to explore a competitive advantage in the era of global competition.