Investigating the nonlinear relationship between financial ratios and capital structure in companies listed on Tehran Stock Exchange

Karimi Khorami, Asghar; Farahmand, Mohammadreza

doi:10.22075/ijnaa.2022.27133.3508

Investigating the nonlinear relationship between financial ratios and capital structure in companies listed on Tehran Stock Exchange

Document Type : Research Paper

Authors

Asghar Karimi Khorami ¹

Mohammadreza Farahmand ²

¹ Department of Accounting, Abarkouh Branch, Islamic Azad University, Abarkouh, Iran

² Department of Computer, Abarkouh Branch, Islamic Azad University, Abarkouh, Iran

10.22075/ijnaa.2022.27133.3508

Abstract

The aim of this study was to investigate the nonlinear relationship between financial ratios and capital structure in companies listed on the Tehran Stock Exchange over a period of six years, from 2014 to 2020. The samples of the present study include 134 eligible companies listed on the stock exchange. Tehran and the research method is descriptive-correlational. Data and theoretical foundations of the research have been collected through library studies. Nonlinear regression was not used for data analysis using Ives and Stata econometric software. The results of this study show that a significant non-linear relationship was observed between the financial relations of the capital structure, so it can be justified by referring to the process of political spending, which is one of the components of accounting theories. Also, other research results are based on the non-linear relationship between the variable components of financial ratios and capital structure.

Keywords

financial ratio

capital structure

asset turnover

inventory turnover