Choosing capital structure of the companies in the capital market of Iran under business cycle

Document Type : Original Article

Author

Department of Accounting, Faculty of Management and Accounting, Tonkabon Branch, Islamic Azad University, Tonkabon, Iran.

Abstract
Capital structure is closely related with financial risks to its impact on company value, but in different conditions economic activities can be different and affect optimal capital structure decisions. Also, consideration of the variable ownership concentration on the choice of capital structure under different business cycle conditions can be of interest. Therefore, the purpose of this article is to choice the capital structure of the companies in the capital market of Iran under the business cycle. The research period between 2009 and 2020 is for 144 companies. OLS, GLS and Generalized Method of Moments (GMM) tests have been used to analyze the data. The results show that the financial leverage has a positive relationship with the ratio of Tangibility assets, while it has a negative relationship with the firm size. Also, with the Hedrick & Prescot approach, in the business boom stage, the financial leverage did not have a positive relationship with profitability, but in the recession, the financial leverage had an inverse relationship with profitable and ownership concentration.

Keywords


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