The Effect of Economic and Accounting Variables on Capital Structure: Empirical Evidence from Iranian Companies

Abstract

The aim of this study is to investigate the effects of economic and accounting variables on capital structure of companies listed on Tehran Stock Exchange. To describe the effect of research variables on capital structure, the multivariate regression model (seemingly unrelated regression equations) and initial data of listed companies between 2001 until 2008 are used. The main research question is whether changes in accounting and economic variables have effect on capital structure of Iranian companies or not. The results show that in addition to accounting variables, economic variables can significantly influenced the manager’s decisions about the composition of financial resources and in this respect they are very important. Overall, the research hypotheses were accepted and confirmed the significant relationship between economic and accounting variables and capital structure.

Keywords: Capital Structure, Microeconomic Variables, Accounting Variables, Multivariate Regression