The Effect of Sub-Optimal Capital Structure on Firms's Real Performance

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Olad Ghafari Hamid; KHOSRAVI POUR NEGAR

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Journal: The Financial Accounting and Auditing Researches Year:2020 | Volume:12 | Issue:45 Page(s): 239-271

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Information Journal Paper

Title

The Effect of Sub-Optimal Capital Structure on Firms's Real Performance

Author(s)

Olad Ghafari Hamid | KHOSRAVI POUR NEGAR | Issue Writer Certificate

Keywords

Optimal Capital StructureQ2

Financial PerformanceQ2

Actual Return on Assets and EquityQ1

Abstract

The capital structure situation and financing decisions is one of the most important decisions of managers that affects firm performance. The main goal of this paper is to investigate the effect of the capital structure optimality on the firm's real performance. Also, in order to investigate the effect of financing decisions on the firms's real performance, the earnings management by discretionary accruals is separated from the firm's returns to measure the direct effect of capital structure on the firm's performance. For this, data on 143 companies listed in Tehran Stock Exchange were extracted and a hybrid data regression model was used to test the research hypotheses. The results indicated that deviation from the Optimal Capital Structure has a significant effect on actual returns. Also, the results show a negative and significant relationship between both Over-leverage and Under-leverage capital structure and real return and Increase in sub-optimality of capital structure; decrease the real return on assets and equity.

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APA: Copy

Olad Ghafari, Hamid, & KHOSRAVI POUR, NEGAR. (2020). The Effect of Sub-Optimal Capital Structure on Firms's Real Performance. THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES, 12(45 ), 239-271. SID. https://sid.ir/paper/197997/en

Vancouver: Copy

Olad Ghafari Hamid, KHOSRAVI POUR NEGAR. The Effect of Sub-Optimal Capital Structure on Firms's Real Performance. THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES[Internet]. 2020;12(45 ):239-271. Available from: https://sid.ir/paper/197997/en

IEEE: Copy

Hamid Olad Ghafari, and NEGAR KHOSRAVI POUR, “The Effect of Sub-Optimal Capital Structure on Firms's Real Performance,” THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES, vol. 12, no. 45 , pp. 239–271, 2020, [Online]. Available: https://sid.ir/paper/197997/en

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