Impact of Environmental Uncertainty on on speed of adjustment to target leverage

Subject Areas : Journal of Investment Knowledge

Mohamad Ali ahmadi ¹ , Allahkaram Salehi ² , Saeed Nasiri ³ , Alireza jorjorzadeh ⁴

1 - Department of Accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran
2 - Department of Accounting, Masjed-soleiman Branch, Islamic Azad University, Masjed-soleiman, Iran.
3 - Department of Accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran
4 - Department of Accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran

Received: 2020-08-05 Accepted : 2020-10-31 Published : 2023-06-22

Keywords: "Environmental Uncertainty", "speed of adjustment to target leverage ", " target leverage",

Abstract :

The aim of this study is to investigate the effect of Environmental Uncertainty on speed of adjustment to target leverage of listed Companies in Tehran Stock Exchange. The coefficient of variation (CV) of sales (scaled by total assets) to capture environmental uncertainty. For this purpose three hypotheses are developed and data on the 142 companies in Tehran Stock Exchange for the period of 1389 to 1397 were analyzed. This regression model using combined data with a consolidated approach, reviews and tests. The results showed that the criteria of Environmental Uncertainty has significant positive impact on speed of adjustment to target leverage. Moreover, the results showed that the effect of Environmental Uncertainty on speed of adjustment to target leverage in firms with a above-target leverage adjust their leverage More than in firms with a below-target leverage adjust their leverage. Therefore, the research results indicate that Environmental uncertainty, Makes information asymmetry between management and stakeholders more acute it also imposes serious restrictions for the company, and influences the strategy and decisions of company managers. As a result, the target lever adjusts faster.

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