Investigation of relation between capital structure and profitability in tehran stock exchange

Hadi Asadi¹ Farzad Emadi² Ghorban Safari³ Abbas Ghaffari Ghaziani⁴ Mohammad Reza Ebrati⁵

1) Islamic Azad University Tabriz Branch
2) Islamic Azad University Tabriz Science and Reserch Branch
3) Islamic Azad University Tabriz Science and Reserch Branch
4) Iran University Guilan Branch
5) Islamic Azad University Tabriz Branch

IOI Code : XYCH-AEDZH
Publication : 3rd International conference on Management , Economics and Humanities(icmeh.org)
Abstract :
    In this study, the relationship between capital structure and profitability were studied. To measure the ratio of total debt to total equity capital structure, the total debt to total assets, total current liabilities to total assets and total non-current liabilities to total assets and to measure the rate of return on equity profitability as the dependent variable and firm size and growth investment opportunities to develop hypotheses were used as a control variable. In this study, the 5-year data from 1389 to 1393 were used. The multivariate regression test and correlation coefficient was used in all hypotheses results suggest that a significant positive relationship between capital structure and profitability there.In other words, capital structure on profitability of companies listed on Tehran Stock Exchange has an effect. Under circumstances where the companies are profitable,the use of financial leverage in favor of companies listed on the Tehran Stock Exchange, but in terms non profitability of high debt is not recommended.

Keywords : capital structure profitable investment growth opportunity