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The Effect of Product Market Competition on the Relationship between Capital Structure and Financial Performance of Companies

Author

Listed:
  • Mahmoud Mahmoudzadeh

    (Firoozkooh Branch, Islamic Azad University, Iran,)

  • Ali Seyfi

    (Firoozkooh Branch, Islamic Azad University, Iran,)

Abstract

Investors and stakeholders are the two groups to which information about the company's financial performance is important. Given the importance of good financial performance of the companies to investors and stakeholders for maximizing their wealth, it is essential to identify and study the factors affecting financial performance. Therefore, the present study aims to examine the effect of product market competition on the relationship between capital structure and financial performance of the companies listed in Tehran stock exchange during 2009-2013. Panel data model and Eviews software were used for data analysis and hypotheses test. General conclusion of the research hypotheses shows that financial leverage, level of competition, and mutual effect of financial leverage have significant effect on the sample companies' financial performance. Thus, all research hypotheses are confirmed

Suggested Citation

  • Mahmoud Mahmoudzadeh & Ali Seyfi, 2017. "The Effect of Product Market Competition on the Relationship between Capital Structure and Financial Performance of Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 523-526.
    • Handle: RePEc:eco:journ1:2017-03-67
    as

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    References listed on IDEAS

    as
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    3. Brander, James A. & Lewis, Tracy R., 1986. "Oligopoly and Financial Structure: The Limited Liability Effect," American Economic Review, American Economic Association, vol. 76(5), pages 956-970, December.
    4. Campello, Murillo, 2006. "Debt financing: Does it boost or hurt firm performance in product markets?," Journal of Financial Economics, Elsevier, vol. 82(1), pages 135-172, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Financial Leverage; The Level of Competition; Financial Performance;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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