Investigating different influential factors on capital structure of different sectors of industries listed in Tehran Stock Exchange

Abstract

Capital structure plays an important role on market growth investigation. In this paper, we investigate the relationship between capital structure as dependent variable and seven independent variables including tax rate, firms' growth rate, fixed assets, firms' size, operating risk, profitability and industry type. The proposed study of this paper uses the financial information of 107 selected companies from 18 different industries listed on Tehran Stock Exchange over the period of 2004-2011 covering 40% of total number of companies listed in this stock exchange. We use ordinary least square technique to study the relationships. The results of the survey indicate that the there is a positive relationship between tax rate and firm's growth rate, and capital structure. The result of the survey also indicates there is a negative relationship between firm's profitability and capital structure. However, there is no evidence to believe that there was any relationship between fixed assets and capital structure. We have also concluded that there was a negative relationship between firm's profitability and capital structure but the results of our survey did not indicate that there was any difference between the mean of profitability in various sectors.