Leverage financing and financial competitiveness of a firm: a study of listed companies in Pakistan

Purpose- The core purpose of this study explores the nexus of financial competitiveness, the liquidity position of a firm, and leverage financing. Methodology- This analysis is based on 7 years of data from 398 listed companies in Pakistan, while panel least square (PLS) techniques have been applied to estimate the parameters. Findings- The financial position of a firm is also affected by macroeconomic indicators. The intangible assets and cost of debt are also important determinants. It was noted that the return on equity in small and medium enterprises is higher than in large-scale industrial units despite very low return on assets in small and medium enterprises. Conclusions- The study concludes that the size of a firm, debt financing, and liquidity position are important, significant, and robust determinants of financial competitiveness. The real source of this differentiation is the magnitudes of leverage financing and liquidity position of enterprises.