Leverage and Firm Value under Financial Health: Pharmaceutical and Chemical Industry in Bangladesh
Author (s)
Rafia Tasnim
Abstract
In this study, the effect of financial leverage on firm value has been explored, and whether financial health affects this relationship in the pharmaceutical and chemical industry of Bangladesh has also been assessed. The study employs fixed-effects regression using panel data of 21 listed companies from 2014 to 2023, a total of 210 firm-year observations, to investigate the association between leverage, firm value, and other control variables. The findings indicate that the leverage ratio, firm size, and growth opportunities are positively correlated with firm value. The coefficient of leverage remains positive and statistically significant when the financial health variable (Altman’s Z-score) is included, and the interaction between leverage and Z-score is also positive and statistically significant. This suggests that the value-enhancing impact of leverage is larger for financially healthier firms and smaller for financially vulnerable firms. Adding financial health also enhances the explanatory power of the model. The results emphasize the need to take into account the financial health of firms when determining the capital structure of the company and offer implications for managers, investors, and policymakers on how to make prudent choices in capital structure management and value creation.
Keywords: Financial Leverage, Firm Value, Financial Health, Capital Structure, Growth Opportunities, Pharmaceutical and Chemical Industry.
| Title: | Leverage and Firm Value under Financial Health: Pharmaceutical and Chemical Industry in Bangladesh |
|---|---|
| Author: | Rafia Tasnim |
| Journal Name: | International Journal of Science and Business |
| Website: | ijsab.com |
| ISSN: | ISSN 2520-4750 (Online), ISSN 2521-3040 (Print) |
| DOI: | https://doi.org/10.58970/IJSB.2720 |
| Media: | Online |
| Volume: | 54 |
| Issue: | 1 |
| Issue publication (Year): | 2026 |
| Acceptance Date: | 20/09/2026 |
| Date of Publication: | 27/09/2026 |
| PDF URL: | http://ijsab.com/wp-content/uploads/2720.pdf |
| Free download: | Available |
| Page: | 90-99 |
| First Page: | 90 |
| Last Page: | 99 |
| Paper Type: | Research Paper |
| Current Status: | Published |
Cite This Article:
Tasnim, R. (2026). Leverage and Firm Value under Financial Health: Pharmaceutical and Chemical Industry in Bangladesh, International Journal of Science and Business, 54(1), 90-99. https://doi.org/10.58970/IJSB.2720
About Author (s)
Rafia Tasnim, Independent Researcher, Dhaka, Bangladesh.
DOI: https://doi.org/10.58970/IJSB.2720
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