Abstract
Capital structure plays an important role on market growth investigation. In this paper, we investigate the relationship between capital structure as dependent variable and seven independent variables including tax rate, firms' growth rate, fixed assets, firms' size, operating risk, profitability and industry type. The proposed study of this paper uses the financial information of 107 selected companies from 18 different industries listed on Tehran Stock Exchange over the period of 2004-2011 covering 40% of total number of companies listed in this stock exchange. We use ordinary least square technique to study the relationships. The results of the survey indicate that the there is a positive relationship between tax rate and firm's growth rate, and capital structure. The result of the survey also indicates there is a negative relationship between firm's profitability and capital structure. However, there is no evidence to believe that there was any relationship between fixed assets and capital structure. We have also concluded that there was a negative relationship between firm's profitability and capital structure but the results of our survey did not indicate that there was any difference between the mean of profitability in various sectors.
Highlights
Capital structure plays an important role on financial performance of the stock market and there are literally different works dedicated on the effects of various factors on it (Lahmiri, 2012). Azouzi, and Anis (2012), for instance, investigated the determinants of firms’ investment introducing a behavioral perspective, which has received little investigation in corporate finance literature
The results revealed that the behavioral analysis of investment decision implies leader had affected by behavioral biases adjusts its investment choices based on their ability to assess alternatives and risk perception to generate of shareholder value and ensure its place at the head of the management team
We have presented an empirical investigation to study the impact of seven factors on capital structure using the panel data gathered from Tehran Stock Exchange over the period of 20042011
Summary
Capital structure plays an important role on financial performance of the stock market and there are literally different works dedicated on the effects of various factors on it (Lahmiri, 2012). Azouzi, and Anis (2012), for instance, investigated the determinants of firms’ investment introducing a behavioral perspective, which has received little investigation in corporate finance literature. The survey recommended a non-linear inverted U-shape relationship between the degree of international diversification and short-term debt financing They found that internationally diversified firms supported higher level of debt financing, which directly results in reduction of overall cost of capital despite higher equity risk. Guney et al (2011) analyzed the relationship between product market competition and the capital structure of Chinese listed firms in a static and dynamic setting They studied an unbalanced panel dataset of 10,416 firm-year observations in 12 industries over the period 1994-2006. They reported that there were significant differences in the debt ratios and product market competition across various industries They suggested that the relationship between leverage and product market competition was non-linear, depending on industry kind, company size and firms' growth opportunities. The survey did not indicate any relationship between macro economical factors, including growth domestic product and inflations, and capital adequacy
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
