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Comparative Study of Capital Structure Determinants in Selected Stock Exchanges of Developing Countries and Tehran Stock Exchange

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  • Saeed Fathi
  • Farzaneh Ghandehari
  • Sayyed Ya’ghoub Shirangi

Abstract

This paper studies determinants of capital structure in listed firms of selected stock exchanges of developing countries and Tehran stock exchange, and comprises effects of these determinants on selected stock exchanges with Iran. In this study, determinants of capital structure are studied in firm and country levels. In firm-level profitability, distance from bankruptcy, size and tangible assets, and in country level stock market development and GDP growth are studied. Data are collected from Compustat Global Vantage database, World Bank databases and Tadbirpardaz software. Panel Regression is used for analysis and Excel and EViews 6 and F and t test statistics are used. Results of study in level of developing countries show that except development of stock market, GDP growth and distance from bankruptcy, all variables have a significant relationship with capital structure; distance from bankruptcy and tangible assets on Tehran Stock Exchange have a significant relationship with capital structure. Impact of distance from of bankruptcy, size and tangible assets in Tehran Stock Exchange and selected developing countries stock exchanges capital structure are different. This paper enables to comparison, benchmarking, identifying strengths and weaknesses and its results can be used to determine strategies and objectives of firms financing.

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  • Saeed Fathi & Farzaneh Ghandehari & Sayyed Ya’ghoub Shirangi, 2014. "Comparative Study of Capital Structure Determinants in Selected Stock Exchanges of Developing Countries and Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(1), pages 67-75, January.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:1:p:67-75
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    References listed on IDEAS

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    1. Kayo, Eduardo K. & Kimura, Herbert, 2011. "Hierarchical determinants of capital structure," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 358-371, February.
    2. Stewart C. Myers, 2001. "Capital Structure," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 81-102, Spring.
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