The Investigation of Co-Determination of Capital Structure and Stock Returns in Listed Companies in Tehran Stock Exchange (TSE)

Ansari, Abdolmehdi; Yousefzadeh, Nasrin; Zare, Zahra

doi:10.22034/iaar.2015.103914

The Investigation of Co-Determination of Capital Structure and Stock Returns in Listed Companies in Tehran Stock Exchange (TSE)

Document Type : Original Article

Authors

Abdolmehdi Ansari

Nasrin Yousefzadeh

Zahra Zare

10.22034/iaar.2015.103914

Abstract

The purpose of this survey is to study the effective factors on the capital structure and stock returns simultaneously. For achieving this goal, financial information related to the 97 exchange firms which were available during the survey period (1380 – 1389) were analyzed by using the structural equations approach. The structural Equations modeling make the regressive equations testing possible simultaneously for the researcher. The results of this survey show that stock returns, profitability, assets structure, awaiting growth, firm size, industry sort affect the capital structure. The effective factors on the stock returns are: capital structure, profitability, momentum and firm value. The findings of this survey show the interrelationships among the capital structure and stock returns in a way that stock returns according to the market timing theory have had negative effect on the capital structure , and capital structure on the stock returns have had the positive effect according to the direct relationship of the risk and return.

Keywords

Capital Structure

Stock Returns

Latent Variables

LInear Structural RELation (LISREL)

Structural Equation Modeling (SEM)