The impact of leverage and other key variables on business performance: evidence from Greece

This paper uses firm level panel data to investigate, empirically, the effects of leverage and other key variables on the financial performance of business in the Greek economy during the period 1997–2004; a period during which Greek firms were making adjustments to meet the requirements of the new environment of Economic Monetary Union. The study examines the effect of leverage in combination with other strategic determinants on business financial performance in the case of industrial firms, which have to survive in the environment of Eurozone and the market of 300 million consumers. Results show that leverage in parallel with export activity, location and investments significantly affect firm performance in a relatively small market which inevitably suffers from the sharpen competitive pressures taking place throughout Europe.