Author(s): Hanoof Kadasah*, Heba Gazzaz
The paper investigates the effect of Operating and Financial Leverage on Financial Performance in the Saudi industrial sector. The study sample includes twenty-one listed and active firms from 2020 to 2023, considering the Covid-19 period. The study results showed that operating and financial leverage experienced significant fluctuations from 2020 to 2023, primarily due to the economic uncertainty caused by the Covid-19 pandemic. Companies adopted more conservative financial strategies, resulting in reduced loan and debt issuance. Additionally, the study runs Random Effects GLS (robust standard errors) to examine the effect of operating and financial leverage as well as year fixed impact on financial performance. The main results indicate that financial leverage has a significant and positive impact on the return on equity of Saudi industrial firms