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DEBT CONTRACTS AND CAPITAL STRUCTURE ADJUSTMENT SPEED IN THE TEHRAN STOCK EXCHANGE
Corresponding Author(s) : Abdolhossein Talebi Najafabadi
Humanities & Social Sciences Reviews,
Vol. 7 No. 1 (2019): January
Abstract
Purpose of the Study: A competitive market and the complexity of the business environment led to the special attention of practitioners in the field of economics to the capital structure and, especially, economic units of debts. The current study investigates the relationship between debt contracts and changes in the capital structure of 114 companies listed on the Tehran Stock Exchange from 2011 to 2016.
Methodology: In this research, the data was extracted, classified, and calculated by using Excel software and ultimately, the hypotheses were tested at a 95% confidence level through E-views†â€and Stata software.
Conclusions / Results: The results indicate that there is no significant relationship among debt contracts, debt contract restrictions, and debt contract in the unfavorable financial conditions with the capital structure adjustment speed in the companies listed on the Tehran Stock Exchange in the studied time interval, but this relationship is visible between two variables of debt contracts and capital structure adjustment speed in the companies that have a high financial leverage.
Novelty: The study of financing of leveraging methods is very important in considering different factors. That is, choosing any cheap or expensive debt on the part of the company, while changing the cost of capital, will create favorable profit opportunities or lead to a critical situation. Accordingly, the present research in the subject area, time, and place of interest can overcome the doubts of stakeholders in the mindset of companies.
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- Akhtar, S., (2005). "The Determinant of Capital Structure for Australian Multinational and Domestic Corporations", Australian Journal of Management, 3. DOI: https://doi.org/10.1177/031289620503000208
- Azar, A. & Mansour M., (1998). "Statistics and its Application in Management", Volume (I), Third Edition, Tehran: The Organization for Researching and Composing University Text books in the Humanities (SAMT).
- Brander, A. & Lewis, R., (1986). "Oligopoly and Financial Structure: The Limited Liability Effect", American Economic Review, 76: 956-970.
- De Angelo, H. & Masulis, R., (1980). "Optimal capital structure under corporate and personal taxation", Journal of Financial Economics, 8(1): 3−29. DOI: https://doi.org/10.1016/0304-405X(80)90019-7
- Delavar, A., (2004). "Theoretical and Practical Foundations of Research in the Humanities and Social Sciences", Third Edition, Second Revision, Tehran: Roshd Publishing.
- Erik D., Shofiqur R. & Desmond T., (2017). " Debt contracts and the speed of capital structure adjustment", Journal of Corporate Finance, S0929-1199(17)30215-8.
- Etemadi, H. & Montazeri, M., (2013). "Investigating the Factors Affecting the Capital Structure of Listed Companies in Tehran Stock Exchange, Emphasizing on Product market competition", Accounting and Audit, 20 (3): 1-26.
- Gojarati, D., (2006). "The Econometric Foundations", Volume 2, Translated by Abrishami, H., Fourth Edition, Tehran: Tehran University Press.
- Gorji, A. M. & Raei, R., (2015). "Explaining the Capital Structure adjustment Speed by means of the Dynamic Model of Optimal Capital Structure with Emphasis on the Product Market Competitiveness Factor", Journal of Financial Knowledge, 8(25).
- Guney, Y., Li, L. & Fairchild, R. (2011). "The relationship between product market competition and capital structure in Chinese listed firms", International Review of Financial Analysis, 2: 41-51. DOI: https://doi.org/10.1016/j.irfa.2010.10.003
- Hashemi zadeh A. & Keshavarz mehr, D., (2015). "Investigating the Asymmetry of the Capital Structure Speed: Dynamic Threshold Model", Financial Engineering and Management of Securities, 23: 59-78.
- Mohrman, M., (1996). "The use of fixed GAAP provisions in debt contracts", Accounting Horizons, 10 (3): 78-91.
- Nabavi, B., (1996). "Introduction to the Method of Research in the Social Sciences", 17th edition, Tehran, Farvardin Publishing.
- Nikolaev, V., (2007). "Debt contracts and accounting conservatism", Working paper, University of Chicago.
- Pandey, I.M., (2004). "Capital structure, profitability and market structure: Evidence from Malaysia", Asia Pacific Journal of Economics and Business, 8(2): 78-91.
- Pour heidari, O., (1995). "Investigating the Factors of the Capital structure adjustment of Accepted Companies in the Tehran Stock Exchange", Master of Science (Management) Thesis, Tehran University.
- Ramsheh M., Soleimani Amiri, Gh., Eskandari, R. & Ghareh Khani, M., (2017). "Investigating the Capital Structure in Tehran Stock Exchange", Journal of Management and Finance, 5 (18: 35-56.
- Rathinasamy, R. S., Krishnaswamy, C. R., & Mantripragada, K. G., (2000). "Capital structure and product market interaction: An international perspective", Global Business and Finance Review, 5(2): 51−63.
- Setayesh, M. & Jamalian pour, M., (2011). "The Effectiveness of Capital Structure and its Changes on Advancement of Financial Strategies of Companies Listed in Tehran Stock Exchange", Accounting and Auditing, 18(84): 73 -90.
- Sinaei, H. (2007). "Investigating the Effect of Internal Factors of Companies on the Formation of Capital Structure of Tehran Stock Exchange Companies", Accounting and Auditing, 14 (48): 63-84.
- Sunder, J., Sunder, S.V. & Zhang, J., (2009). "Borrower Conservatism and Debt Contracting", Working paper, Northwestern University.
- Watts, R., (2003). "Conservatism in accounting, Part I: Explanations and implications", Accounting Horizons, 17 (3): 207–221. DOI: https://doi.org/10.2308/acch.2003.17.3.207
- Zhang, J., (2008). "The Contracting Benefits of Accounting Conservatism to Lenders and Borrowers", Journal of Accounting & Economics, 45: 27-54. DOI: https://doi.org/10.1016/j.jacceco.2007.06.002
References
Akhtar, S., (2005). "The Determinant of Capital Structure for Australian Multinational and Domestic Corporations", Australian Journal of Management, 3. DOI: https://doi.org/10.1177/031289620503000208
Azar, A. & Mansour M., (1998). "Statistics and its Application in Management", Volume (I), Third Edition, Tehran: The Organization for Researching and Composing University Text books in the Humanities (SAMT).
Brander, A. & Lewis, R., (1986). "Oligopoly and Financial Structure: The Limited Liability Effect", American Economic Review, 76: 956-970.
De Angelo, H. & Masulis, R., (1980). "Optimal capital structure under corporate and personal taxation", Journal of Financial Economics, 8(1): 3−29. DOI: https://doi.org/10.1016/0304-405X(80)90019-7
Delavar, A., (2004). "Theoretical and Practical Foundations of Research in the Humanities and Social Sciences", Third Edition, Second Revision, Tehran: Roshd Publishing.
Erik D., Shofiqur R. & Desmond T., (2017). " Debt contracts and the speed of capital structure adjustment", Journal of Corporate Finance, S0929-1199(17)30215-8.
Etemadi, H. & Montazeri, M., (2013). "Investigating the Factors Affecting the Capital Structure of Listed Companies in Tehran Stock Exchange, Emphasizing on Product market competition", Accounting and Audit, 20 (3): 1-26.
Gojarati, D., (2006). "The Econometric Foundations", Volume 2, Translated by Abrishami, H., Fourth Edition, Tehran: Tehran University Press.
Gorji, A. M. & Raei, R., (2015). "Explaining the Capital Structure adjustment Speed by means of the Dynamic Model of Optimal Capital Structure with Emphasis on the Product Market Competitiveness Factor", Journal of Financial Knowledge, 8(25).
Guney, Y., Li, L. & Fairchild, R. (2011). "The relationship between product market competition and capital structure in Chinese listed firms", International Review of Financial Analysis, 2: 41-51. DOI: https://doi.org/10.1016/j.irfa.2010.10.003
Hashemi zadeh A. & Keshavarz mehr, D., (2015). "Investigating the Asymmetry of the Capital Structure Speed: Dynamic Threshold Model", Financial Engineering and Management of Securities, 23: 59-78.
Mohrman, M., (1996). "The use of fixed GAAP provisions in debt contracts", Accounting Horizons, 10 (3): 78-91.
Nabavi, B., (1996). "Introduction to the Method of Research in the Social Sciences", 17th edition, Tehran, Farvardin Publishing.
Nikolaev, V., (2007). "Debt contracts and accounting conservatism", Working paper, University of Chicago.
Pandey, I.M., (2004). "Capital structure, profitability and market structure: Evidence from Malaysia", Asia Pacific Journal of Economics and Business, 8(2): 78-91.
Pour heidari, O., (1995). "Investigating the Factors of the Capital structure adjustment of Accepted Companies in the Tehran Stock Exchange", Master of Science (Management) Thesis, Tehran University.
Ramsheh M., Soleimani Amiri, Gh., Eskandari, R. & Ghareh Khani, M., (2017). "Investigating the Capital Structure in Tehran Stock Exchange", Journal of Management and Finance, 5 (18: 35-56.
Rathinasamy, R. S., Krishnaswamy, C. R., & Mantripragada, K. G., (2000). "Capital structure and product market interaction: An international perspective", Global Business and Finance Review, 5(2): 51−63.
Setayesh, M. & Jamalian pour, M., (2011). "The Effectiveness of Capital Structure and its Changes on Advancement of Financial Strategies of Companies Listed in Tehran Stock Exchange", Accounting and Auditing, 18(84): 73 -90.
Sinaei, H. (2007). "Investigating the Effect of Internal Factors of Companies on the Formation of Capital Structure of Tehran Stock Exchange Companies", Accounting and Auditing, 14 (48): 63-84.
Sunder, J., Sunder, S.V. & Zhang, J., (2009). "Borrower Conservatism and Debt Contracting", Working paper, Northwestern University.
Watts, R., (2003). "Conservatism in accounting, Part I: Explanations and implications", Accounting Horizons, 17 (3): 207–221. DOI: https://doi.org/10.2308/acch.2003.17.3.207
Zhang, J., (2008). "The Contracting Benefits of Accounting Conservatism to Lenders and Borrowers", Journal of Accounting & Economics, 45: 27-54. DOI: https://doi.org/10.1016/j.jacceco.2007.06.002