Abstract
The objective of present study is to investigate the effects of capital structure on the value of listed companies in Tehran Stock Exchange. The statistical population of present study consisted of listed companies in Tehran Stock Exchange during 2009-2013 and the sample size was equal to 113 companies selected after applying criteria-filtering technique and elimination of outliers and irrelevant observations. In the present study, earnings per share, ratio of dividends per share, fixed assets turnover ratio, current ratio and financial leverage are considered as independent variables to investigate their effects on value of companies. Compiled data as well as panel data are used as fixed effects are supposed. The results of data analysis of different companies through multivariate regression showed 95 percent level of confidence.
Highlights
1.1 Problem StatementReference to studies and literature of financial management shows that one of the major reasons of failure of different companies is lack or insufficiency of investment and improper financing (Clark, 2010)
The objective of testing the first hypothesis is to investigate the association between earning per share (Eps) and value of the company the statistical hypothesis of which is defined in the following: H0: Earnings per share doesn’t influence company value
The first hypothesis of present study is supported and with 95 percent confidence, one can say that there is a significant association between earnings per share (Eps) and company value
Summary
1.1 Problem StatementReference to studies and literature of financial management shows that one of the major reasons of failure of different companies is lack or insufficiency of investment and improper financing (Clark, 2010). Owners of these companies might choose an unsuitable composition of resources (Debt to Equity), obtain resources of high financial commitments and liquidity constraints or sign contracts which lead to costly commitments. They might even meet financiers who are hard to deal with. The existing weaknesses might lead to improper investments that threat the survival of companies (Kumar, 2004). It is supposed that economic institutes are better aware of their needed level of investment In such a case, the problem is that what kind of resources can be used to finance. How many bonds should be issued and how much investment is supplied from issuing more shares (Adam & Goyal, 2008)
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