AN ECONOMETRIC STUDY ON THE IMPACT OF FINANCIAL LEVERAGE ON ECONOMIC VALUE ADDED (A CASE STUDY OF ALGERIAN ECONOMIC INSTITUTIONS FOR THE PERIOD 2010-2021)

This study aims to measure the impact of financial leverage on the economic value added (EVA) of a sample of 22 Algerian economic institutions over the period from 2010 to 2021. The study's variables included the effect of financial leverage (ELEV) and the ratio of total debt to equity (LEV) as explanatory variables representing financial leverage, and economic value added (EVA) as the dependent variable. The size of the company(SIZE) was used as a moderating variable for the impact of financial leverage on economic value added. To achieve the study's objective, the selected variables were calculated from the financial statements of the sample institutions during the specified period and analyzed using panel data methodology with EViews v13 software. Based on the Vector Error Correction Model (VECM), the study found that the explanatory variables have a long- term effect on the dependent variable, and that financial leverage, as measured by ELEV, has a statistically significant impact on economic value added. In contrast, the ratio of total debt to equity does not affect the economic value added in Algerian economic institutions. Additionally, the estimated model does not suffer from any standard errors.

DOI: https://doi.org/10.47743/rebs-2024-2-0001