Post by Rashad A. Sultanov

Earned a Distinction from my Dissertation! Almost (officially) graduated with Upper Second-Class Honours from one of the most respected institutions in the world - UCL , and I am grateful that my master’s dissertation was awarded with a Distinction. ( unfortunately one low course mark limited my chances from overall Distinction). When I first shared my topic idea ( I literally asked a lot of people), and many said: “We already know this , debt helps, then hurts.” But I wanted to prove that this assumption collapses under real-world shocks like Brexit and COVID-19. So I built two datasets from scratch using Bloomberg data on FTSE 350 non-financial firms (2015–2024): • one measuring total leverage, • another separating short- and long-term debt to see if debt maturity changes how leverage affects performance. After cleaning, validating, and winsorising all variables, I ran a structured model path — OLS → Fixed Effects → System GMM — to uncover the real story. Fixed Effects model was useful to see clearer picture with fixed firm traits and within- firm variation and applied System GMM to address endogeneity and capture real causal effects, smth OLS could not do. It was a steep learning curve, but mastering it allowed me to build a model that truly reflected how firm dynamics evolve over time. Here’s what I found: • Profitability follows an inverted-U curve, peaking at an optimal leverage ratio around 22 %. • Short-term debt improves resilience, while long-term debt amplifies losses. • And the biggest twist: large and older firms, often viewed as “safe,” were the least resilient. Their size became rigidity under crisis pressure. Two hypotheses held true: the non-linear leverage-profitability link and the benefit of debt flexibility. Two collapsed: firm size and age didn not protect profitability; they intensified risk. The takeaway was clear, in crises, financial flexibility beats size. It took months of Bloomberg extraction, testing, and sleepless revision; all under the guidance of Deyu Ming , but it was worth every minute. Also conveying my big thanks to my first supervisor- Neil Sutherland -who then was replaced. Thanks Neil for making a right decision at the right time, and building a foundation. As you said, it did turn out to be a great project! This project added to me many things, and prolly improved how I think about finance. It proved that even familiar theories can reveal something new, if you are willing to test them harder than anyone else. Grateful to my friends, family, and the State Program of Azerbaijan for making my dreams true!