Maximization of shareholders’ wealth, which is the heart of economic growth, as a long term proposition delivers higher economic output through productivity gains, employment growth and higher wages. Financial leverage on the other hand, results from the use of debt and preferred stock to increase stockholder earnings. The aim of this paper is to explore relationship between Shareholders’ wealth and leverage of Indian companies of oil and gas sector. Data consisted of ROCE, sales, net worth, debt equity ratio, total debt to total assets ratio of top 10 companies of this sector, which were on the basis of market capitalization. These data were collected for a period of five years 2013-14 to 2017-18. The collected data were used to find the impact of leverage on shareholders’ wealth of the companies. Panel data regression, fixed effect model and random effect model were estimated and compared on the basis of diagnostic parameters to find the most parsimonious model. It was found while performing panel data regression that random effect model was the most parsimonious model. The model proved to be significant from the calculated F value and explained 91.5% variability in the ROCE. Both the variables, which proxies for leverage (debt equity ratio and total debt to total assets ratio), were impacting ROCE..

KEYWORDS:  Shareholders’ Wealth, Economic Growth, Productivity Gains, ROCE .