Investigating the effect of debt level selection and debt maturity on investment behavior of companies listed on the Tehran Stock Exchange

Document Type : Original Article

Authors

Accounting Department, Hatef Institute of Higher Education, Zahedan, Iran

Abstract

Investment is a process in which the right facilities are used to generate profitability. In this regard, the combination of capital structure and its relationship with shareholder wealth is important. The most important about capital structure is to determine the optimal ratio for the amount of debt to stocks because it directly affects the value of the company. The choice between the amount of capital used or the debt depends on various factors, including the influence of the capital structure based on internal factors, to increase the value of the company. Unlike previous researches done, the present is holistic study. The purpose of this study is to investigate the effect of debt levels and debt maturities on the investment behaviour of active companies listed on the Tehran Stock Exchange during the period 2011-2018. In this study, regression model using panel data has been used to investigate this effect. The results of this study indicate that debt levels and debt maturity have a negative significant effect on corporate investment behaviour, which indicates that debt maturity and debt levels are considered as a factor that limits the company's excessive investment. The results also show that companies with high debt will probably not be able to take advantage of their future opportunities.

Keywords

Main Subjects


Abor, J., and Godfred, A., (2017)." Investment Opportunities, Corporate Finance, and Dividend Payout Policy", Economics and Finance Vol 23, No 7.
Aygun, M., Ic, S., and Sayim, M. (2017). "The impact of debt structure on firm investments: Empirical evidence from turkey"7 Archives of Business Research, 2(2), 22-7.
Biddle, G.; G. Hilary; R. Verdi (2016); “How Does Financial Reporting Quality Relate to Investment Efficiency?”, Journal of Accounting and Economics, Vol. 48, 2-3, pp. 112-131.
Hubbard, R. (1998); “Capital-market imperfections and investment”, Journal of Economic Literature, Vol. 36, pp. 193-225.
Jian-Shen Chen (2019).” Influence of Capital Structure and Operational Risk on profitability of life Insurance Industry in Taiwan” Journal of Modelling in Management” Vol. 4 No. 1, pp. 7-18.
Modigliani, F. and Miller, M. (1958), “The Cost of Capital, Corporate Finance and the Theory of Investment”, American Economic Review, 48, pp. 261-97.
Myers, S. (1977); “Determinants of corporate borrowing”, Journal of Financial Economics, Vol. 5, pp. 147-175.
Tobin, K. (1998); “Qualititative perceptions of learning environments on the world wide web In B. J. Fraser & K. G. Tobin (eds.)”, International handbook of science education, Kluwer Academic Publishers, United Kingdom, pp. 139-162.