From the above studies it can be found that there is an existence of the significant impact for the independent variables including the financial leverage and the systematic risk in case of the Chinese companies which have been listed in NSADAQ on the overall annual returns of the stock of these companies (Liu et al, 2012).
In addition to this on the basis of this study it has also been concluded that these independent financial variables gives the explanation of the 5.9 % of changes which may be occurring in the stock returns as they are considered to be the part of the dependent variable. Also, it can be said that the results give the indication that the presence of the significant impact may be there in case of the financial leverage on the annual returns of stocks of the NASDAQ listed companies in China. In china, the surplus and consumption ratio is also low that indicates that how Chinese economy has been badly impacted because of the shocks on the consistent basis (Chakraborty et al., 2016). The current consumption is relatively low than the historical average consumption. This may be as a result of the overall decline which may be there in the stocks in China for a large number of firms over the specific time. If the financial structure of the companies of China is studied, the overall financing of the internal findings is comparatively lower. In case of the listed companies in which the profits are positively and uniformly distributed, the proportions which may be related to the external source financing may be generally around 80 to 90 5 which is higher in comparison to the internal source financing. Whenever there are some of the companies which have been listed and they have the negative earnings, they are completely dependent on the external financiaing. The proportions for the same are above 90 %.
Financial leverage may be observed whenever there is a negative correlation between the stock returns or the volatility of the stocks whenever there is a drop in the price of stocks.The above analysis indicates that there is good existence of financial leverage and leverage effect in Chinese market. As per the volatility return equation in chapter 3, this is indicated that financial leverage comes in picture when there is financial decline of the company (Chen, J. J., & Zhang, 2014). Entire stock data in the available 50 Chinse listed company data tends towards decline over the time and hence gives significant indication for the financial leverage.