The Role of Sales Growth in Determining the Effect of Operating Leverage on Financial Performance: The Case of Turkey

Özet

This article analyses the impact of sales growth on the association between operating leverage and financial performance. Using a sample of 200 firms listed on Istanbul Stock Exchange over the period from 2008 to 2017, we find that operating leverage has a negative effect on profitability, and that the negative effect of operating leverage is stronger (weaker) for firms with low (high) sales growth. It implies that sales growth mitigates the negative impact of operating leverage on profitability. These results confirm that firms with high operating leverage should increase sales level to…

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