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Research on the Impact of Financial Leverage on Corporate Investment Decisions

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Financial leverage can significantly enhance corporate investment decisions by reducing capital costs.
The analysis shows that financial leverage prompts short-term investment expansion but increases bankruptcy risk.
Guided by Modigliani-Miller's tax-adjusted model, this research explores mechanisms behind leverage's impact on investment.
Firms should manage leverage carefully to maintain a balance between returns and financial risks.

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This research examines how financial leverage influences investment decisions, highlighting risks and optimization strategies.

Dazhong Wu (2025) studied this question.

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