Research Article | OPEN ACCESS
The Relationship between Financial Flexibility and Capital Structure Decisions
1Roya Darabi, 2Salah Mohamadi, 3Ahmad GHasemi and 3Shanaz Forozan
1South Tehran Branch, Islamic Azad University
2Department of Accounting, Marivan Branch, Islamic Azad University
3Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran
Research Journal of Applied Sciences, Engineering and Technology 2013 14:3843-3850
Received: October 22, 2012 | Accepted: December 28, 2012 | Published: April 20, 2013
Abstract
Making decisions about capital structure is one of the most challenging and problematic issues companies face and thereby it is the most crucial decisions companies have to make for their survival. The aim of this study was to investigate the relationship between financial flexibility and capital structure decisions in accepted companies in Tehran Stock Exchange with using Falkner and Wang Model. Results of testing hypothesis which are based on a sample- that is consisted of 82 firms for a period of five years from 2006 to 2011- using multivariate linear regression models as well as panel data method, implied that marginal value of cash is negative in terms of market, i.e. the market is not willing to raise funds and will not evaluate this increase to be positive in funds. Furthermore, findings represent that there is no significant relationship between marginal value of financial flexibility and capital structure decisions of firms and firms would not pay attention to financial flexibility level in their decisions regarding increasing or decreasing debts, which in long term would result in loosing financial flexibility as well as profitable investment opportunities.
Keywords:
Abnormal returns, capital structure, financial flexibility, financial leverage, marginal value of cash,
Competing interests
The authors have no competing interests.
Open Access Policy
This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Copyright
The authors have no competing interests.
|
|
![](http://www.maxwellsci.com/images/RJASET-maxw.jpg) |
ISSN (Online): 2040-7467
ISSN (Print): 2040-7459 |
![Submit Manuscript](../images/sub.jpg) |
Information |
|
|
|
Sales & Services |
|
|
|