Evaluating the Relationship between Asymmetric Information, Debt Capacity and Capital Structure of Listed Companies in Tehran Stock Exchange

Mozhgan Pishdar, Ali Amiri

Abstract


The survival and continuity of the companies in today's complex and competitive business environment require profitable activities such as investment in projects. Companies invest in projects due to various factors such as risk and expected rate of return, and financing the required resources for investment forms the company's capital structure. Financing decisions are one of the most basic areas of decision-making by managers. In addition, the phenomenon of asymmetric information affects the capital structure. Therefore, the importance of asymmetric information and debt capacity and considering the effect of these variables are important for the capital structure of companies. The main purpose of this research was to investigate the relationship between asymmetric information, debt capacity and the capital structure of listed companies on the Stock Exchange in Tehran. For this purpose, a sample of 95 companies listed in Tehran Stock Exchange has been studied during the five years (2010-2014). To verify the hypotheses, multivariate regression test was used. The results of hypotheses testing show that there is a significant relationship between debt capacity (using the criteria of net debt to total assets and shareholders' equity to total assets) and the capital structure of listed companies in Tehran Stock Exchange.


Keywords


Asymmetric information, debt capacity, capital structure.  

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