The objective of the thesis is to evaluate the efficiency using contemporary methods of economical analysis. The preamble includes brief history of the company, description of the technical aspect of rising the profit and value added by prosecution of the power plant. In analytical part I evaluate the company using analytical indicators quantified from financial statements. I describe the indicator itself and comment results and eventually propose improvements. At the end I apply comparative methods using data from statements of competitors in the sector.

O objetivo desta tese foi avaliar os efeitos decorrentes do registro de instrumentos financeiros híbridos junto às linhas patrimoniais. Para tanto, foram utilizados modelos de relevância informacional, os quais avaliam a forma como os números contábeis são assimilados pelos preços e retornos acionários (OHLSON, 1995; ABOODY et al., 1999; LIMA, 2010; LOPES; WALKER, 2012). Adicionalmente, também foram observadas as inter-relações entre a emissão e a contabilização de tais contratos com o custo de capital próprio, alavancagem financeira e a carga tributária efetiva, respectivamente, considerados como determinantes para utilização dessa modalidade de captação de recursos (LEE; FIGLEWICZ, 1999). No tocante ao desenvolvimento metodológico desta pesquisa, foram compostos dois conjuntos amostrais, sendo: (i) grupo de interesse, formando por 39 empresas que emitiram os instrumentos híbridos aqui estudados, presentes em 10 jurisdições; e (ii) grupo de controle, no qual se encontram 107 organizações domiciliadas nos mesmos países e setores, bem como de composição patrimonial similar ao grupo previamente relatado. Foram coletadas observações para essas companhias de dezembro de 2005 a dezembro de 2015, em bases trimestrais, perfazendo um total de 3.386 observações. A leitura das notas explicativas do grupo de interesse indicou que essas empresas registraram os híbridos junto ao PL, considerando elementos interpretativos minimamente questionáveis à luz da essência econômica sobre a forma jurídica desses títulos. Isto é, sob uma análise conjugada dos instrumentos híbridos aqui avaliados com a IAS 32, é possível inferir que a modalidade de contratos analisada se aproxima mais da definição de passivo financeiro do que de instrumento patrimonial. Entretanto, no âmbito dos resultados quantitativos, verificou-se, em linhas gerais, que os modelos de relevância informacional indicam que o montante dos híbridos afeta os preços e retornos acionários dos emitentes não relacionados a projetos de infraestrutura, de maneira positiva e estaticamente significante. Tal contrariedade pode ser mais bem compreendida aplicando-se o conceito da profecia autorrealizável de Merton (1968), em que o registro contábil de um título como PL, ainda que de maneira equivocada, desencadeará nos agentes de mercado a percepção de que esse de fato possui tal condição, adotando comportamentos que fazem com que a concepção originalmente falsa se torne verdadeira. Do mesmo modo, a ausência de questionamentos por parte dos auditores externos e dos reguladores corroboraria o tratamento empregado pelas organizações, gerando os efeitos descritos nos investidores. Com relação aos fatores determinantes para emissão desses títulos, foi verificado que os emitentes possuem custo de capital próprio superior, são mais alavancados financeiramente e demonstraram cargas tributárias efetivas inferiores aos não emitentes. Dessa maneira, é possível concluir que embora novas modalidades de contratos para obtenções de valores, tais como os instrumentos híbridos, sejam importantes para o financiamento das atividades empresarias, é fundamental que a contabilidade represente de forma fidedigna a natureza econômica desses instrumentos, a fim de que não haja distorções na posição patrimonial das entidades e, por conseguinte, gere vieses nos usuários das demonstrações financeiras / The main purpose of this thesis was to evaluate the effects of hybrid financial instruments bookkeeping as equity. Therefore, were used value relevance econometrics models, which assess how the accounting figures are assimilated by the stock prices and stock returns (OHLSON, 1995; Aboody et al., 1999; LIMA, 2010; LOPES; Walker, 2012). Additionally, were observed the relationships between these contracts and cost of capital, financial leverage and effective tax rate, respectively, considered crucial to use of this fundraising tool (LEE; FIGLEWICZ, 1999). Regarding to the methodological development of this research was composed two samples, namely: (i) interest group, formed by 39 companies that issued hybrid instruments presents in 10 different jurisdictions; and (ii) control group, which have 107 organizations domiciled in the same countries and operating in the same sectors, as well as its equity composition is similar to the interest group. Observations were collected for these firms from December 2005 to December 2015, on a quarterly basis, forming a total database with 3.386 observations. The technical notes of the interest group analysis indicated that these firms recorded hybrids as equity instruments, considering interpretative elements at least questionable in light of the economic substance over the legal form of these bonds. Therefore, in a combined analysis of hybrid instruments evaluating IAS 32 together, it is possible to infer that these contracts is closer to the concept of financial liability than equity instrument definition. However, under the quantitative finds, it was verified that the amount of hybrid affects the prices and stock returns of issuers, not related to infrastructure projects, in a positive and statistically significant way. Such results opposition might be better understood applying the concept of self-fulfilling prophecy of Merton (1968), in which the accounting records of a contract such as equity, albeit wrongly, will trigger on the market players the insight that this truly or it has such condition, adopting behaviors that make the original false conception becomes true. Similarly, the absence of queries by regulators and auditors corroborate the treatment employed by the firms, supporting the effects described on the investors. Concerning to the determinant factors for the issuance of these bonds, was found that the issuers have higher cost of capital, are more leveraged and revealed lower effective taxes rates than non-issuers. Hence, can be concluded that while new forms of contracts for obtaining resources, such as hybrids, are important for the financing of entrepreneurial activities, it is essential that accounting represent faithfully the economic nature of these instruments in order to not create distortions in the financial position and, therefore, generate biases in users of financial statements.

No description available.

A valid and accurate capital asset pricing model (CAPM) may help investors and mutual funds managers in determining expected returns and thus, may increase profits which can be reflected on the community resources. The problem is that the traditional CAPM does not accurately predict the expected rate of return. A more accurate model is needed to help investors in determining the intrinsic price of the financial asset they want to sell or buy. The purpose of this study was to examine the validity of the single-factor CAPM and then develop and test the validity of a multifactor CAPM in the Jordanian stock market. The study was informed by the modern portfolio theory and specifically by the single-factor CAPM developed by Sharpe, Lintner, and Mossin. The research questions for the study examined the factors that may explain the variation in the expected rate of return on stocks in the Jordanian stock market and the relationship between the expected rate of return and factors of market return, company size, financial leverage, and operating leverage. A causal-comparative quantitative research design was employed to achieve the purpose of the study by testing the listed companies on the Amman stock exchange (ASE) for the period from 2000 to 2015. Data were collected from the ASE database and analyzed using the multiple regression model and t test. The results revealed that market return, company size, and financial leverage are not predictors of the expected rate of return while operating leverage is a predictor. The results of this study may contribute to positive social change by changing the way the individual investors and mutual funds managers select their investing portfolios which can lead to better resource distribution in the economy.

The main objective of the thesis was to investigate the factors that determine capital structures of financial firms using two separate samples of banks and insurance companies. In the first instance, the results of the study showed that the financing behaviour of banks mirrors that of non-financial firms. It was also observed bank financing behaviour can be best explained by the pecking order theory. Risk and size variables were observed to be negatively related to the Tier 1 regulatory capital ratio, whereas the dividend variable was positively related. Similarly, risk and size were found to be negatively associated with buffer capital, while dividends were positively related. The 2007–2009 global financial crisis (GFC) was found to have negatively affected the financial structures of banks. Consistent with similar studies, it was observed that banks have a target capital structure, and adjust to this target at an adjustment speed of 44%. With regard to insurance companies, it was observed that the firm-level determinants of capital structure explain insurer leveraging. Unlike banks, the 2007–2009 GFC positively affected the capital structure of insurance companies. Similar to banks, results showed that insurers have target capital structures which they seek to achieve in their financing and adjust to such targets at a rate of 21%, which is lower than that of banks. The study contributes to the body of knowledge in four major ways. Firstly, it adds to the literature on the capital structure of financial firms, which area has not been extensively and conclusively studied. Using a different environment, it validates the ‘standard corporate finance view’ as has been observed in the few studies on financial firms. Secondly, it validates the ‘buffer view’ and ‘regulatory view’ of capital structures of financial firms that have taken prominence since the last GFC. Thirdly, the study recognises that banks and insurance companies are fundamentally different with regard to capital structure and regulation and therefore warranted separate treatment in studies. This is in contrast with recent studies that do not recognise the heterogeneity of the two types of firms. Fourthly, to the researcher’s knowledge this study is the first to examine the impact of business cycles/financial crises on the financing patterns of financial firms. Confirming the fundamental differences between banks and insurance companies, the study observed that financial crises have a negative impact on capital structures of banks (meaning that they deleverage during crises). In contrast, financial crises have a positive impact on capital structures of insurance companies (meaning, unlike banks, they leverage during crises). / Business Management / D. Phil. (Management Studies)

Made available in DSpace on 2016-03-15T19:26:41Z (GMT). No. of bitstreams: 1 Claudio Campos.pdf: 616754 bytes, checksum: 460e9f837eac7a814ae3967a63fbc3f7 (MD5) Previous issue date: 2009-02-03 / Fundo Mackenzie de Pesquisa / Two theoretical currents, which have been developed in the context of the North American economy, compete with each other to explain the Capital Structure of organizations. The first one called Static Trade-off Theory shows that the enterprises pursue a pre-established capital structure, whereas the second, called Pecking Order Theory" states that what determines the debt-ratio of the enterprises is the difference between the cash-flow generated internally and the financial deficit. It is the scope of this study to test the hypothesis of Trade-off and Pecking Order in the Corporate decisions concerning Finance using the Cross-Section Method to analyze the data of a sample of 214 Brazilian firms listed in Bovespa Stock Exchange. This study took into consideration the structure of research by Tong and Green (2005) which had been performed with a sample of 50 Chinese companies, due to the characteristics of the Chinese economy and the recommendation on the part of the authors to apply these models in countries under development or economies in transition. The studies carried out by Allen (1993), Baskin (1989) and Adedeji (1998) were also used to define three models in which the Pecking Order Theory and the Trade-off Theory present very different predictions:- (1) The determinants of financial leverage, (2) the relationship between financial leverage and dividends, (3)The determinants of the Corporate investment. As a relevant result, it was confirmed through the first model that there is indeed a negative and significant relation between financial leverage and profitability; the second model showed a positive and significant relation between financial leverage and index of dividends paid; whereas the third model, like in the studies by Tom and Green, did not lead to any conclusions; pointing out that the overall results tend to the Pecking Order Theory. Therefore, this work brings new empirical evidences for the theories by Tong and Green showing that the behavior of financing of the Brazilian companies follow the conventional model of Corporate Capital Structure. / Duas correntes teóricas, que foram desenvolvidas no contexto da economia norte-americana, competem entre si pela explicação da estrutura de capital das empresas. A primeira, chamada de Static Trade-off Theory, indica que as empresas perseguem uma estrutura de capital pré-estabelecida, e, a segunda, denominada Pecking Order Theory, corrobora que o que determina o endividamento das empresas é a diferença entre o fluxo de caixa gerado internamente e o déficit financeiro. Visando a testar as hipóteses de Trade-off e Pecking Order nas decisões corporativas de finanças e usando a metodologia de análise de dados em corte transversal cross-section" para uma amostra de 214 das maiores empresas brasileiras listadas na bolsa de valores Bovespa, este estudo considerou a estrutura da pesquisa de Tong e Green (2005) elaborada com uma amostra de 50 empresas chinesas, dadas as características da economia chinesa e a indicação dos autores para se trabalhar esses modelos em países em desenvolvimento ou economias em transição. Também foram utilizados, como base, os estudos de Allen (1993), Baskin (1989) e Adedeji (1998) para estabelecer os três modelos nos quais as teorias de Pecking Order e Trade-off apresentam previsões claramente diferentes: (1) os determinantes da alavancagem financeira; (2) a relação entre alavancagem financeira e dividendos; e (3) os determinantes dos investimentos corporativos. Como resultado expressivo, confirmamos, por meio do modelo (1), que há , de fato, uma relação negativa e significante entre alavancagem financeira e rentabilidade das empresas; e, no modelo (2), uma relação positiva e significante entre alavancagem financeira e os índices de dividendos pagos. Entretanto, o modelo (3), a exemplo do resultado do trabalho de Tong e Green (2005), mostrou-se inconclusivo, apontando, no final, que os resultados tendem para a teoria de Packing Order. Esses resultados acrescentam novas experiências empíricas para as teorias de Trade-off e Pecking Order, demonstrando que o modelo convencional de estrutura de capital corporativo pode explicar o comportamento de financiamento das empresas brasileiras.

O objetivo desta tese foi avaliar os efeitos decorrentes do registro de instrumentos financeiros híbridos junto às linhas patrimoniais. Para tanto, foram utilizados modelos de relevância informacional, os quais avaliam a forma como os números contábeis são assimilados pelos preços e retornos acionários (OHLSON, 1995; ABOODY et al., 1999; LIMA, 2010; LOPES; WALKER, 2012). Adicionalmente, também foram observadas as inter-relações entre a emissão e a contabilização de tais contratos com o custo de capital próprio, alavancagem financeira e a carga tributária efetiva, respectivamente, considerados como determinantes para utilização dessa modalidade de captação de recursos (LEE; FIGLEWICZ, 1999). No tocante ao desenvolvimento metodológico desta pesquisa, foram compostos dois conjuntos amostrais, sendo: (i) grupo de interesse, formando por 39 empresas que emitiram os instrumentos híbridos aqui estudados, presentes em 10 jurisdições; e (ii) grupo de controle, no qual se encontram 107 organizações domiciliadas nos mesmos países e setores, bem como de composição patrimonial similar ao grupo previamente relatado. Foram coletadas observações para essas companhias de dezembro de 2005 a dezembro de 2015, em bases trimestrais, perfazendo um total de 3.386 observações. A leitura das notas explicativas do grupo de interesse indicou que essas empresas registraram os híbridos junto ao PL, considerando elementos interpretativos minimamente questionáveis à luz da essência econômica sobre a forma jurídica desses títulos. Isto é, sob uma análise conjugada dos instrumentos híbridos aqui avaliados com a IAS 32, é possível inferir que a modalidade de contratos analisada se aproxima mais da definição de passivo financeiro do que de instrumento patrimonial. Entretanto, no âmbito dos resultados quantitativos, verificou-se, em linhas gerais, que os modelos de relevância informacional indicam que o montante dos híbridos afeta os preços e retornos acionários dos emitentes não relacionados a projetos de infraestrutura, de maneira positiva e estaticamente significante. Tal contrariedade pode ser mais bem compreendida aplicando-se o conceito da profecia autorrealizável de Merton (1968), em que o registro contábil de um título como PL, ainda que de maneira equivocada, desencadeará nos agentes de mercado a percepção de que esse de fato possui tal condição, adotando comportamentos que fazem com que a concepção originalmente falsa se torne verdadeira. Do mesmo modo, a ausência de questionamentos por parte dos auditores externos e dos reguladores corroboraria o tratamento empregado pelas organizações, gerando os efeitos descritos nos investidores. Com relação aos fatores determinantes para emissão desses títulos, foi verificado que os emitentes possuem custo de capital próprio superior, são mais alavancados financeiramente e demonstraram cargas tributárias efetivas inferiores aos não emitentes. Dessa maneira, é possível concluir que embora novas modalidades de contratos para obtenções de valores, tais como os instrumentos híbridos, sejam importantes para o financiamento das atividades empresarias, é fundamental que a contabilidade represente de forma fidedigna a natureza econômica desses instrumentos, a fim de que não haja distorções na posição patrimonial das entidades e, por conseguinte, gere vieses nos usuários das demonstrações financeiras / The main purpose of this thesis was to evaluate the effects of hybrid financial instruments bookkeeping as equity. Therefore, were used value relevance econometrics models, which assess how the accounting figures are assimilated by the stock prices and stock returns (OHLSON, 1995; Aboody et al., 1999; LIMA, 2010; LOPES; Walker, 2012). Additionally, were observed the relationships between these contracts and cost of capital, financial leverage and effective tax rate, respectively, considered crucial to use of this fundraising tool (LEE; FIGLEWICZ, 1999). Regarding to the methodological development of this research was composed two samples, namely: (i) interest group, formed by 39 companies that issued hybrid instruments presents in 10 different jurisdictions; and (ii) control group, which have 107 organizations domiciled in the same countries and operating in the same sectors, as well as its equity composition is similar to the interest group. Observations were collected for these firms from December 2005 to December 2015, on a quarterly basis, forming a total database with 3.386 observations. The technical notes of the interest group analysis indicated that these firms recorded hybrids as equity instruments, considering interpretative elements at least questionable in light of the economic substance over the legal form of these bonds. Therefore, in a combined analysis of hybrid instruments evaluating IAS 32 together, it is possible to infer that these contracts is closer to the concept of financial liability than equity instrument definition. However, under the quantitative finds, it was verified that the amount of hybrid affects the prices and stock returns of issuers, not related to infrastructure projects, in a positive and statistically significant way. Such results opposition might be better understood applying the concept of self-fulfilling prophecy of Merton (1968), in which the accounting records of a contract such as equity, albeit wrongly, will trigger on the market players the insight that this truly or it has such condition, adopting behaviors that make the original false conception becomes true. Similarly, the absence of queries by regulators and auditors corroborate the treatment employed by the firms, supporting the effects described on the investors. Concerning to the determinant factors for the issuance of these bonds, was found that the issuers have higher cost of capital, are more leveraged and revealed lower effective taxes rates than non-issuers. Hence, can be concluded that while new forms of contracts for obtaining resources, such as hybrids, are important for the financing of entrepreneurial activities, it is essential that accounting represent faithfully the economic nature of these instruments in order to not create distortions in the financial position and, therefore, generate biases in users of financial statements.

The goal of the Thesis was to perform a research about the Private Equity industry and Leveraged Buyout type of deal. Within practical part of the Thesis, was goal to create financial model and use it to analyse real case LBO transaction. Due to lack of Czech literature about the topic and secrecy of the industry, foreign studies and literature were primary source of information but also an interviews with Czech investment professionals and advisors. In practical part of the Thesis was created general LBO model with Microsoft Excel, with functions able to perform different LBO transactions. This financial model, was later used to perform LBO acquisition analysis of company Severomoraské vodovody a kanalizace Ostrava a.s.

Abstract in English, Afrikaans and Zulu / This study is aimed at investigating the capital structures of the Johannesburg Stock Exchange listed South African IT firms and compare these to the capital structures of NASDAQ listed US IT firms in order to better understand the capital structures that JSE listed South African firms employ. The study made use of secondary data in the form of ratio analysis from public sources, as well as the published annual financial statements of the firms. The Generalised Method of Moments regression analysis technique was used in order to test the data for relationships between certain ratios. The study found positive relationships between the firm’s capital structure and its return on equity; meaning that firms should make use of their capital structures to maximise their return on equity and as a result, returns for its shareholders. / Hierdie studie is daarop gerig om die kapitaalstrukture van Suid-Afrikaanse IT-ondernemings wat op die Johannesburgse Aandelebeurs (JSE) genoteer is te ondersoek, en dit te vergelyk met die kapitaalstrukture van NASDAQ-genoteerde Amerikaanse IT-ondernemings ten einde die kapitaalstrukture wat JSE-genoteerde Suid-Afrikaanse ondernemings gebruik, beter te verstaan. Die studie het sekondêre data in die vorm van verhoudingsontleding uit openbare bronne, asook die gepubliseerde finansiële jaarstate van die ondernemings gebruik. Die Veralgemeende Metode van Momente-regressieanalisetegniek is gebruik ten einde die data vir verwantskappe tussen bepaalde verhoudings te toets. Die studie het positiewe verwantskappe tussen die ondernemings se kapitaalstruktuur en opbrengs op ekwiteit gevind; dit beteken dat ondernemings hul kapitaalstrukture behoort te gebruik om hul opbrengs op ekwiteit en gevolglik ook opbrengste vir hul aandeelhouers te maksimeer. / Lolu cwaningo kuhloswe ngalo ukuhlola izinhlaka ezifaka imali ezinkampanini zobuchwephese bamakhompuyutha ezisohlwini lwe-Johannesburg Stock Exchange (i-JSE), nokuziqhathanisa nezinhlaka ezifaka imali ezinkampanini zase-US zobuchwepheshe bekhompuyutha ezisohlwini lwe-NASDAQ ukuze kuqondakale kangcono izinhlaka ezifaka imali ezinkampanini zaseNingizimu Afrika ezisohlwini lwe-JSE. Lolu cwaningo lusebenzise imininingwane eqoqwe kweminye emayelana nokucwaningwa kwezinombolo etholakala emithonjeni evulelekile emalungwini omphakathi kanye nakwizitatimende zezezimali zonyaka zezinkampani. Kusetshenziswe indlela yokucwaninga ehlawumbiselayo ngokuqhathanisa ubudlelwano neyaziwa ngokuthi yi-Generalised Method of Moments, ukuze kuhlolwe imininingwane eveza ubudlelwano phakathi kwezinombolo ezithile. Ucwaningo luthole ubudlelwano obubonakalayo phakathi kwezinhlaka ezifaka imali enkampanini kanye nenzuzo yayo yamanani amasheya; okusho ukuthi izinkampani kumele zisebenzise izinhlaka zazo ezizifakela imali ukwandisa amathuba enzuzo yamanani amasheya okuyinto ezodala ukuba kuhlomule abanini-bamasheya. / Finance, Risk Management and Banking / M. Com. (Finance)

本研究旨在探討公司系統性風險與會計變數之關聯性。影響公司系統性風險之因素應包括公司內部因素與公司外部總體經濟因素，但過去文獻並未完全涵蓋到，致使其模式解釋力皆不高。為彌補過去文獻之不足，本研究先以理論推導方式將公司內部與外部因素納入系統性風險模式中，再以實證資料驗證之。 　　模型推導結果顯示，影響系統性風險之因素包括公司盈餘、營運槓桿度、財務槓桿度、帳面價值、股利、市場組合報酬率、無風險報酬率，以及其他總體經濟因素等。理論推導結果產生三大主要命題： 　　1. 在公司前期盈餘為正及當期銷貨成長率為正，以及公司當期之每股盈餘、每股帳面價值及每股現金股利對股價具有正向影響時，公司當期總槓桿程度（營運槓桿度與財務槓桿度之乘積）對系統性風險具有正向影響。 　　2. 在公司前期盈餘為正，以及公司當期之每股盈餘、每股帳面價值及每股現金股利對股價具有正向影響時，公司當期每股現金股利對系統性風險具有正向影響。 　　3. 當公司當期銷貨成長率為正時，營運槓桿度與財務槓桿度為正向相關；但當公司當期銷貨成長率為負時，營運槓桿度與財務槓桿度具有抵換關係。 　　根據上述命題，本研究設立三項假說。第一，公司總槓桿程度對系統性風險具有正向影響，而營運槓桿度與財務槓桿度對系統性風險之影響皆為正向（或負向）。第二，公司發放現金股利對系統性風險具有正向影響。第三，在系統性風險與盈餘皆不變的額外前提下，當銷貨成長率為負時，營運槓桿度與財務槓桿度具有抵換關係;當銷貨成長率為正時，營運槓桿度與財務槓桿度為正相關。 　　實證結果部分支持上述三項假說。首先，公司總槓桿程度、財務槓桿度及現金股利皆對系統性風險具有顯著正向影響。因此，公司可利用降低總槓桿程度、財務槓桿度及減少現金股利之策略來減低系統性風險。其次，市場組合報酬、通貨膨脹率及國民生產毛額成長率等總體經濟因素，對系統性風險皆具有負向顯著影響。此結果說明導致公司系統性風險上升之因素應該包括公司內部與外部因素。因此，公司欲降低風險時，除了利用總槓桿程度、財務槓桿度與股利政策外，尚須考慮其他總體經濟變化。最後，實證結果亦顯示，當公司正處於銷貨成長時期，以追求成長為目標，可能同時面臨高營運風險與高財務風險。然而，在銷貨衰退時，公司卻不必然會以風險控管為目標。因此，營運槓桿度與財務槓桿度並不存在抵換關係。 / This thesis examines the relationship between firm systematic risk and accounting variables. Potential determinants of firm systematic risk theoretically include accounting and macroeconomic variables, but prior research only explored part of them and most models yielded low explanatory power. This research analytically derives and empirically verifies a model of firm systematic risk. 　　The analytical results suggest that determinants of systematic risk at least include earnings, the degree of operating leverage, the degree of financial leverage, book value, dividend, market-portfolio return, risk-free return and other macroeconomic variables. Three main propositions are therefore derived as follows. 　　1. When a firm's prior year earnings and current year sales growth are both positive, if its current book value, cash dividend, and earnings all have a positive effect on its stock price, then its degree of total leverage, defined as the product of degree of operating leverage and degree of financial leverage, has a positive effect on its systematic risk. 　　2. When a firm's prior year earnings is positive, if its current book value, cash dividend, and earnings all have a positive effect on its stock price, then its current cash dividend has a positive effect on its systematic risk. 　　3. When a firm's current year sales growth is positive (negative), its degree of operating leverage is positively (negatively) related with its degree of financial leverage. 　　Three hypotheses are then tested empirically. First, a firm's degree of total leverage has a positive effect on its systematic risk; and its degree of operating leverage and degree of financial leverage both have a positive (or both negative) effect on its systematic risk. Second, a firm's cash dividend has a positive effect on its systematic risk. Third, if a firm's sales growth is positive (negative) without any change in its systematic risk or earnings, then its degree of operating leverage is positively (negatively) related with its degree of financial leverage. 　　The empirical results provide partial support for the above hypotheses. First, the degree of total leverage, degree of financial leverage, and cash dividend each has a positive effect on the systematic risk. Therefore, a firm can reduce its systematic risk by lowering its degree of total leverage, degree of financial leverage and the cash dividend. Second, macroeconomic factors such as the market-portfolio return, inflation and GNP growth have a negative effect on the systematic risk. Hence, a firm attempting to control its systematic risk should consider the changes of macroeconomics besides the leverage and dividend policy. Finally, a firm with growing sales takes a high degree of operating leverage and financial leverage, but a firm does not necessarily take a high (low) degree of operating leverage and a low (high) degree of financial leverage as target when its sales are declining. In other words, these two leverages have no offset relationship.