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

  • Mahmoud Moeinaddin


    (Islamic Azad University)

  • Shahnaz Nayebzadeh


    (Islamic Azad University)

  • Masoumeh Ghasemi


    (Islamic Azad University)

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    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.

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    Article provided by Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences in its journal International Journal of Academic Research in Accounting, Finance and Management Sciences.

    Volume (Year): 3 (2013)
    Issue (Month): 3 (July)
    Pages: 221-233

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    Handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:221-233
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    9. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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