AN INVESTIGATION OF THE EFFECT OF PAST INFORMATION AND VARIABLES AFFECTING THE FIRM'S CAPITAL STRUCTURE IN TEHRAN STOCK EXCHANGE

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NAMAZI MOHAMMAD; HESHMATI MORTEZA

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Journal: THE IRANIAN ACCOUNTING AND AUDITING REVIEW Year:2007 | Volume:14 | Issue:49 Page(s): 139-160

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Title

AN INVESTIGATION OF THE EFFECT OF PAST INFORMATION AND VARIABLES AFFECTING THE FIRM'S CAPITAL STRUCTURE IN TEHRAN STOCK EXCHANGE

Author(s)

NAMAZI MOHAMMAD | HESHMATI MORTEZA | Issue Writer Certificate

Keywords

CAPITAL STRUCTUREQ2

FINANCIAL LEVERAGEQ2

MARKET VALUESQ2

PAST INFORMATIONQ3

PROFITABILITYQ2

Abstract

The theory of CAPITAL STRUCTURE offers two competing models of financing decisions. In the trade-off model, firms identify their optimal leverage by weighting the costs and benefits of debts. In the pecking order model, firms finance new investments first with retained earnings, then with debts, and finally with outside equity. The empirical literature provides conflicting assessments about how firms choose their CAPITAL STRUCTUREs. We investigate the effect of delayed variables and factors that affect firm's leverage changes. For this purpose, we gathered data from 164 firms in Tehran Stock Exchange, during 1379-1383 years. Using panel data regression model, our results indicate that firm's past PROFITABILITY has strong influence on their market leverage, and this effect last for over two years. Also, firm's past financial deficits have strong influence on their book leverage, and this effect last for over two years. The effect of stock returns on book leverage, last only for over one year. The market-to-book ratios of assets have short-run effect on market leverage as well as book leverage.

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APA: Copy

HESHMATI, MORTEZA, & NAMAZI, MOHAMMAD. (2007). AN INVESTIGATION OF THE EFFECT OF PAST INFORMATION AND VARIABLES AFFECTING THE FIRM'S CAPITAL STRUCTURE IN TEHRAN STOCK EXCHANGE. THE IRANIAN ACCOUNTING AND AUDITING REVIEW, 14(49), 139-160. SID. https://sid.ir/paper/8177/en

Vancouver: Copy

HESHMATI MORTEZA, NAMAZI MOHAMMAD. AN INVESTIGATION OF THE EFFECT OF PAST INFORMATION AND VARIABLES AFFECTING THE FIRM'S CAPITAL STRUCTURE IN TEHRAN STOCK EXCHANGE. THE IRANIAN ACCOUNTING AND AUDITING REVIEW[Internet]. 2007;14(49):139-160. Available from: https://sid.ir/paper/8177/en

IEEE: Copy

MORTEZA HESHMATI, and MOHAMMAD NAMAZI, “AN INVESTIGATION OF THE EFFECT OF PAST INFORMATION AND VARIABLES AFFECTING THE FIRM'S CAPITAL STRUCTURE IN TEHRAN STOCK EXCHANGE,” THE IRANIAN ACCOUNTING AND AUDITING REVIEW, vol. 14, no. 49, pp. 139–160, 2007, [Online]. Available: https://sid.ir/paper/8177/en

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