What are the implications of a change in the return on equity with an increase in debt financing?

When you have increased debt it will increase the leverage factor for a company. During normal or prosperous times, leverage results in exponential profit returns. During a recession leverage can result in exponential losses. Since return on equity is (earnings per share) / (book value) it should change by increased use of debt. Debt is leverage and should (if used effectively) increase the earnings a company makes without changing book value. A big debt load carries risk because of the response of leverage to the current economic conditions. An increased debt hurts ROE during a recession and benefits ROE during prosperous times. The main benefit of increased debt is the increased benefit from the interest expense as it reduces taxable income. But it would not make sense to over load a company with debt. With an increased debt load the following occurs:
Interest expense rises and cash flow needs to cover the interest expense also rise.
Debt issuers become nervous that the company will not be able to cover its financial responsibilities with respect to the debt they are issuing.