The Effect of Political Relevance on the Rate of Adjustment of Financial Leverage in Listed Companies of Tehran Stock Exchange
Subject Areas : • Emerging technology in the field of Accounting and its futureNegar Baygan 1 , Seyed Mahmoud Mousavi Shiri 2
1 - Master of Accounting, Department of Accounting, Payame Noor University, Tehran, Iran.
2 - Associate Professor, Department of Accounting, Payame Noor University, Tehran, Iran.
Keywords: Adjustment Speed, Financial Leverage, Political Communication.,
Abstract :
Objective: The main purpose of this study is to investigate the effect of political communication on the speed of adjustment of financial leverage . Method: In order to achieve the research objectives, a sample of 130 listed companies in the stock exchange that were selected according to systematic exclusion pattern was collected for a 7-year period from 2016 to 2022. To test the research hypotheses, a linear multivariate regression model was used. Findings: testing the research hypotheses¬showed that the financial leverage of the firm depends on the speed of its adjustment during its periods, but political communication does not affect the speed of adjustment of the financial leverage. Conclusion:Current research provided evidence that the political relations of managers could not¬ help them¬to develop financial leverage.
Asadi, Gholamhosein, Tajvidi, Elnaz, Esmaeilpour, Soheil(2021) Investigating the relationship between financial situation and industry characteristics with the speed of adjustment of capital structure. Journal of Investing, 10(37), pp. 1-21.
Bayegan, Negar, Kargar, H., Mehravar, M., Zangeneh, S., (2019)"Investigating the Relationship between Political Communication, Capital Structure and Cash Holding in Companies Listed in Tehran Stock Exchange" 2nd National Conference on Fundamental Research in Management and Accounting.
Behbahaninia, Parisa Sadat, Akbarian Shoorkaei, Reza; Hoseinzadeh, Fatemeh (2018) Relationship between capital structure selection information asymmetry and debt capacity in listed companies in Tehran Stock Exchange. Perspective of Financial Management, pp.9-34
KhalifehSoltani,SeyedAhmad,Rahnama,Maryam,Komasi,Farzaneh (2018)The Effect of Political Communication on the Risk of Stock Price Crash under Information Asymmetry of Audit Knowledge Journal,Vol.9,No.4 ,
Ramesheh, Manijeh, Soleimani Amiri, Gholamreza, Eskandari, Rasoul (2016) Investigating the speed of adjustment of capital structure based on prediction of equilibrium and hierarchical theories in Tehran Stock Exchange. Empirical Research in Accounting pp. 161-186
Roodposhti, Fereydoun, Mohseni, Abdolreza, (2018) Political Communication, Cash Profit, and Return on Shares in Companies Listed in Tehran Stock Exchange.Quarterly Journal of Financial Knowledge of Securities Analysis , Vol. 11, No. 38
Zamani Sabzi, Mahdi, Saeedi, Ali; Hasani, Mohammad (2020) The speed of adjustment of capital structure and the impact of boom and recession on it. Financial Research, 22(2), pp. 160-181.
Salehinia, Mohsen; Tamradi, Ali (2019) "The Impact of Political Communication on Financing Policies" quarterly journal of financial accounting researches No. 2, Volume 11
Moradi, M., Parhizkar Malekabad, S. Esmat (2021) Investigation of the effect of inflation rate risk and company-specific risk on the speed of adjustment of capital structure of the company: Generalized Method of Moments. Experimental Accounting Researches, 11(29), pp. 23-51.
Nazemi Ardakani Mehdi, Zare, Amirhossein (2016). The Effect of Corporate Governance on the Speed of Capital Structure Adjustment Using Generalized Torque Method. Volume(6) Issue (15) pp. 43-59
Valizadeh Larijani, Azam, Esnaashari, H. (2017) Capital structure and its speed of adjustment in the life cycle of the company and the role of profitability. Quarterly Journal of Financial Management Strategy, 5(4), pp. 62-69.
Hashemi, Seyed Abbas, Keshavarzmehr, Davood (2015) Investigating the asymmetry of the speed of adjustment of capital structure: dynamic threshold model, Journal of Financial Engineering and Securities Management, 23(2)(2)
. Li, Guoping, and Zhou, Hong. (2015). “Political connections and access to IPO markets in China, China Economic Review”, 33, 76–93.
Arikawa, Yasuhiro and HOANG, Hanh Nguyen, Capital Structure Adjustment in Emerging Markets: Evidence from Vietnam (January 15, 2022). Available at SSRN: https://ssrn.com/abstract=4009437 or http://dx.doi.org/10.2139/ssrn.4009437
Chang, Y., Robin, K.C., Chou, Huang, T. (2014). Corporate governance and the dynamics of capital structure: New evidence. Journal of Banking and Finance, 48, 374-385
Chen, Y., Lin, F. (2015). "Does institutional short-termism matter with managerial myopia?" Journal of Business Research,Vol. 68, pp. 845-854
Cohen, Lauren, Joshua Coval, and Christopher Malloy. 2011. “Do Powerful Politicians Cause Corporate Downsizing?” Journal of Political Economy 119 (6). University of Chicago Press Chicago, IL: 1015–60.
Colak, Gonul, Ali Gungoraydinoglu, and Özde Öztekin. 2017. “Global Leverage Adjustments, Uncertainty, and Country Institutional Strength.”
Duchin, Ran, and Denis Sosyura. 2012. “The Politics of Government Investment.” Journal of Financial Economics 106 (1): 24–48.
Goldman, Eitan, Jörg Rocholl, and Jongil So. 2009. “Do Politically Connected Boards Affect Firm Value?” Review of Financial Studies 22 (6): 2331–60.
Houston, Joel F., Liangliang Jiang, Chen Lin, and Yue Ma. 2014. “Political Connections and the Cost of Bank Loans.” Journal of Accounting Research 52 (1). Wiley Online Library: 193–243.
J Fitzgerald, J Ryan(2018)The impact of firm characteristics on speed of adjustment to target leverage: a UK study. Applied Economics, 2019 - Taylor & Francis Volume 51, 2019 - Issue 3
Julio, Brandon, and Youngsuk Yook. 2012. “Political Uncertainty and Corporate Investment Cycles.” The Journal of Finance 67 (1). Wiley Online Library: 45–84. ACCEPTED MANUSCRIPT
Li, Guoping, and Zhou, Hong. (2015). “Political connections and access to IPO markets in China, China Economic Review”, 33, 76–93.
Ling, Leng, Zhou, Xiaorong, Liang, Quanxi, Song, Pingping, and Zeng, Haijian. (2016). “Political connections, overinvestments and firm performance: Evidence from Chinese listed real estate firms”. Finance Research Letters, 1–6
Maaloul, A., Chakroun, R., Yahyaoui, S. (2018). The effect of political connections on companies’ performance and value: Evidence from Tunisian companies after the revolution. Journal of Accounting in Emerging Economies, 8 (2), 185-204
Stock, James H., and Motohiro Yogo. 2004. “Testing for Weak Instruments in Linear IV Regression.” Working Paper, NBER Technical Working Papers, National Bureau of Economic Research, Inc. http://ideas.repec.org/p/nbr/nberte/0284.html.
Szamosszegi, Andrew, and Cole Kyle. 2011. An Analysis of State-Owned Enterprises and State Capitalism in China. Capital Trade, Incorporated for U.S.-China Economic and Security Review Commission.
Thuy AnhVoaMieszkoMazurbcAnThai(2022)The impact of COVID-19 economic crisis on the speed of adjustment toward target leverage ratio: An international analysis. Finance Research Letters
Trung K.DoaHenry HongrenHuangbPumanOuyangc(2022) Product market threats and leverage adjustments. Journal of Banking & Finance.Volume 135, February 2022, 106365
Volume 45, March 2022, 102157.pp1-18.
Waisman, Maya, Pengfei Ye, and Yun Zhu. 2015. “The Effect of Political Uncertainty on the Cost of Corporate Debt.” Journal of Financial Stability 16 (January): 106–17.
Wang, Jiayuan, Yang Zou, and Qingbin Wang. 2014. “Fiscal Transfers from the Central Government to Provinces in China: Potential Influence of the Native-Place Connections of Politburo Members.” Journal of Chinese Economics 2 (3).
Woidtke, Tracie. 2002. “Agents Watching Agents? Evidence from Pension Fund Ownership and Firm Value.” Journal of Financial Economics 63 (1). Elsevier: 99–131.
Yu, Frank, and Xiaoyun Yu. 2011. “Corporate Lobbying and Fraud Detection.” Journal of Financial and Quantitative Analysis 46 (6): 1865–1891