Investigating the Relationship Between Corporate Financial Leverage and Risk of Bankruptcy Among Firms
Posted: Jul 03, 2023
Abstract
The relationship between corporate financial leverage and bankruptcy risk represents one of the most fundamental yet complex dynamics in corporate finance. Traditional financial theory, particularly the trade-off theory and pecking order theory, has long established that leverage decisions involve balancing tax benefits against financial distress costs. However, contemporary corporate environments characterized by rapid technological change, global economic integration, and increasingly volatile market conditions have revealed limitations in conventional approaches to understanding this critical relationship. This research addresses these limitations through the development of an innovative computational framework that integrates machine learning methodologies with traditional financial analysis.
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