Investigating the Relationship between Capital Structure and Common Performance Criteria in the Companies Listed in Stock Exchange

Abstract

Obtaining competitive advantage, companies use their resources to improve their relative position than rivals and promoted company position will lead to form better opportunities in future. In industry literature, market share and its growth are regarded as important indicators of company performance and it has been proved that there is a positive relationship between market share and economic profit. According to above explanation, the goal of the research is to investigate the relationship between capital structure and common performance criteria in the companies listed on stock exchange from 2008 to 2013. Based on goal, the research is an applied research and in terms of methodology, the research is a descriptive research. Among types of descriptive researches, the research is a correlative study. Simple and multivariate regressions and T-statistics and F-statistics were used at 95% confidence level. The results of the research indicated that there is significant positive relationship between economic variables of financial performance (economic added value with 0.56 coefficient and market added value with 0.6 coefficient) and capital structure. On the other side, there is a significant positive relationship between accounting variables of financial performance (including net profit with 0.808 coefficient, return of equity with 0.65 coefficients and return on asset with 0.86 coefficients) and capital structure. But it was not observed a significant relationship between profit any share, earning to price ratio and Tobin' Q ration with capital structure. Keywords: economic criteria of financial performance, accounting criteria of financial performance, capital structure