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The Impact of Capital Structure on Corporate Performance

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Listed:
  • Abolfazl Ghadiri Moghaddam
  • Mahdi Sadeghi Kashkoueyeh
  • Mohammadmahdi Talezadeh
  • Mohammadreza Aala
  • Mahdi Ebrahimpour
  • Mina Tehranypour

Abstract

The present study was designed to gather evidence about the relationship between short-term debt, long-term debt with variables such as EPS, return on equity, return on assets and the ratio Q/B. This research was conducted in companies listed in Tehran Stock Exchange. Multiple linear regressions were used to test the hypothesis. In this study, 3 dependent variables, 4 control variables and 3 independent variables are used. Also, 12 hypotheses were provided for this study. The sample of the study consisted of 50 participate in a 5-year period of 2008 to 2012. The findings suggest that there is negative relationship between short-term debt, longterm debt and total debt with returns on equity. Also about four to six hypothesis it became clear that short-term debt and total debt to equity returns are negatively related. In testing hypotheses 7 and 9 showed that short-term debt, long-term debt and total debt is negatively associated with ROA. Also worth noting that in 10 to 12 hypothesis it is showed that there is negative relationship between short-term debt and total debt by Tobin's q.

Suggested Citation

  • Abolfazl Ghadiri Moghaddam & Mahdi Sadeghi Kashkoueyeh & Mohammadmahdi Talezadeh & Mohammadreza Aala & Mahdi Ebrahimpour & Mina Tehranypour, 2015. "The Impact of Capital Structure on Corporate Performance," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(3), pages 404-418, March.
    • Handle: RePEc:hur:ijarbs:v:5:y:2015:i:3:p:404-418
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    References listed on IDEAS

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    1. Gleason, Kimberly C. & Mathur, Lynette Knowles & Mathur, Ike, 2000. "The Interrelationship between Culture, Capital Structure, and Performance: Evidence from European Retailers," Journal of Business Research, Elsevier, vol. 50(2), pages 185-191, November.
    2. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
    3. Krishnan, V. Sivarama & Moyer, R. Charles, 1997. "Performance, capital structure and home country: An analysis of Asian corporations," Global Finance Journal, Elsevier, vol. 8(1), pages 129-143.
    4. Capobianco, Heloisa Márcia Pires & Fernandes, Elton, 2004. "Capital structure in the world airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(6), pages 421-434, July.
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