The Effect of Investors' Divergence of Opinions on the Speed of Adjusting the Financial Leverage Towards the Optimal Leverage

The current research aims to trace the impact of the divergence of investors' opinions on the speed of adjusting the financial leverage of companies towards the optimal level of financial leverage. In order to achieve the objectives of the research, a sample of 124 companies admitted to the stock exchange, which were selected according to the systematic exclusion pattern, was collected for a period of 10 years from 2012 to 2021. A multivariable linear regression model was used to test the research hypotheses. In order to measure the speed of adjustment of financial leverage, the partial adjustment pattern model has been used, and to evaluate the divergence of investors' opinions using the volume of unexpected transactions, the method of Silvia and Cerquera (2021) has been used. According to the findings, it was observed that there is a positive relationship between the divergence of investors' opinions and the speed of adjustment of financial leverage, and with the intensification of the difference of opinion between investors, the speed of adjustment of the company's financial leverage increases. The current research provided evidence that shows that the difference of beliefs and opinions in the capital market and confusion in this field can directly affect the most important pillar of companies (financial leverage) and the speed of their achievement of optimal leverage and optimal debt level.