The Relationship between Product Market Competition and Capital Structure of the Selected Industries of the Tehran Stock Exchange

Mahmoud Moeinaddin (), Shahnaz Nayebzadeh () and Masoumeh Ghasemi ()
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Mahmoud Moeinaddin: Islamic Azad University
Shahnaz Nayebzadeh: Islamic Azad University
Masoumeh Ghasemi: Islamic Azad University

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013, vol. 3, issue 3, 221-233

Abstract: The main objective of this study is to examine the relationship between product market competition and capital structure of the selected industries on the Tehran Stock Exchange. Considering Tobin’s Q and Herfindahl-Hirschman index as the independent variable and the debt ratio as the dependent variable, the research model is developed. This is an applied study classified as the descriptive- correlation study. The sample covers 89 listed firms on the Tehran Stock Exchange during a period over 2007 to 2011. The collected data is analyzed by using multivariate regression executed in EVIEWS software. The findings reveal that there is a significant association between the capital structures of the selected industry and the product market competition. Additionally, applying Tobin’s Q and Herfindahl-Hirschman index as the indexes to measure the competitiveness in the product market does not document the significant relationship between product market competition and capital structure. The other findings, however, confirm the nonlinear relationship between Tobin’s Q and capital structure.

Keywords: Capital Structure; Market Structure; Product market competition; Tobin’s Q; Herfindahl-Hirschman Index (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:3:y:2013:i:3:p:221-233

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