The Relationship between Capital Structure and Corporate Performance In the Tehran Stock Exchange (Business Cycle Effect)

Subject Areas : Financial Knowledge of Securities Analysis

Akram Roshanpazhooh ¹ , Fraydoon Ohadi ²

1 - Master of Business Administration in Finance
2 - Assistant Professor of Industrial Engineering, Islamic Azad University, Karaj Branch

Received: 2017-10-22 Accepted : 2018-01-15 Published : 2019-12-22

Keywords: Capital Structure, Performance, Business Cycle, Regression Model, Tehran Stock Exchange,

Abstract :

Identifying the factors affecting company performance and its analysis in the past and its future prediction for decision making in the financial area is very important. Important factors that play a critical role in determining how firms and institutions work are corporate capital structure and firm strategies.The purpose of this study is to examine the impact of the business cycle on the capital structure and the impact of capital structure on their performance. Hence, in a descriptive-correlation study،a total of 71 companies fromTehran stock exchange from 2004to2015 were selected. For data analysis, panel regression model and Eviews8 software were used. The results indicate an insignificant effect of the business cycle on capital structure، also indicate the negative and significant effect of capital structure on the company's performance in different business cycles.

References:

*      ابزری، مهدی؛ دستگیر، محسن و قلیپور، علی. (1386). فصلنامه بررسی­های اقتصادی، دوره 4، شماره 4، 89-73.

*      اعتمادی، حسین و منتظری، جواد. (1392). بررسی عوامل مؤثر بر ساختار سرمایۀ شرکت‌های پذیرفته‎شده در بورس اوراق بهادار تهران با تأکید بر رقابت بازار تولید. فصلنامه بررسی­های حسابداری و حسابرسی، دوره 20، شماره 3، 26-1.

*      پورزمانی، زهرا؛ جهانشاد، آزیتا؛ نعمتی، علی و فرهودی زارع، پروین. (1389). بررسی عوامل مؤثر بر ساختار سرمایه در شرکتها. پژوهشنامه حسابداری و مالی، 26-46.

*      ستایش، محمدحسین و کارگر فرد جهرمی، محدثه. (1390).  بررسی تأثیر رقابت در بازار محصول بر ساختار سرمایه. فصلنامه پژوهش های تجربی حسبداری مالی، سال اول، شماره اول، 10-31.

*      گرد، عزیز؛ وقفی، حسام و فکوری، محسن. (1393). بررسی رابطه بین معیارهای اهرم مالی(ساختار سرمایه) و معیارهای ارزیابی عملکرد. دوره 4، شماره 3، 18-1.

*      Aleebrahim, P. and Seyed abid.S (2014). The impact of capital structure on firm performance: An empirical investigation of restaurant firms. International Journal of Hospitality Management, 26(3)(3), 502-516.

*      Bandyopadhyay, A., & Barua, N. M. (2016). Factors determining capital structure and corporate performance in India: Studying the business cycle effects. The Quarterly Review of Economics and Finance, 61, 160-172.

*      Bandyopadhyay, A., and Barua, N. M.(2016). Factors Determining Capital Structure and Corporate Performance in India: Studying the Business Cycle Effects, Quarterly Review of Economics and Finance.

*      Baum, C.F., Caglayan, M. & Rashid, A. (2016). Capital structure adjustments: Do macroeconomic and business risks matter?. Empirical Economics, Article not assigned to an issue – Online first article.

*      Booth, L., V. Aivazian, A. Demirguc-Kunt & V. Maksimovic. (2001). Capital structures in developing countries. Journal of Finance. 55(1), pp. 87–130.

*      Capon, N., Farley, J. U., & Hoenig, S. (1990). Determinants of financial performance: a meta-analysis. Management science, 36(10), 1143-1159.

*      Casey, E. & O'Toole, C. (2014). Bank Lending Constraints, Trade Credit and Alternative Financing during the Financial Crisis: Evidence from European SMEs. Journal of Corporate Finance, 27, 173-193.

*      Cook, D. & Tang, T. (2010). Macroeconomic conditions and capital structure adjustment speed. Journal of Corporate Finance 16 (1), 73-87.

*      Dasgupta, S., & Titman, S. (1998). Pricing strategy and financial policy. Review of Financial Studies, 1(4), pp. 705-737.

*      Fama, E. F., & French, K. R. (2002). Testing trade-off and pecking order predictions about dividends and debt. The review of financial studies, 15(1), 1-33.

*      Ghosh, A., Cai, F., & Li, W. (2000). The determinants of capital structure. American Business Review, 18(2), 129.

*      Modigliani, F., & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review. 48(3), 261–297.

*      Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics. 5(2), 147-175.

*      Nickell, P., Perraudin, W., & Varotto, S. (2000). Stability of rating transitions. Journal of Banking and Finance. 24(1-2), 203-227.

*      Öztekin, Ö. & Flannery, M.J. (2012). Institutional determinants of capital structure adjustment speeds. Journal of Financial Economics, 103 (1), 88-112.

*      Pettit, R.R. & Singer, R.F. (1985). Small business finance: A research agenda. Financial Management, 14 (3), 47-60.