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:: Volume 8, Issue 4 (fall 2013) ::
J. Mon. Ec. 2013, 8(4): 59-73 Back to browse issues page
The Impact of Leverage on Firm Investment: Evidence from Tehran Stock Exchange
Mohammad Eghbalnia *, Mohammad Esmaeel Fadayinejad, Mohammad Noferesti
Abstract:   (2991 Views)

The impact of financial leverage on firm investment is one of the most important issues in corporate finance. Debt overhang reduces the incentives of shareholder–management coalition in controlling the firm to invest in positive net-present-value investment opportunities. On the other hand, firms without debt in their financial structure face with a new problem known as over-investment. This study uses regression analysis to survey the effects of financial leverage on investment decisions of TSE  firms between years 2001-2010. The results show that in contrary to previous findings in literature, when using total liabilities to total assets as the measure of leverage, there is no relationship between the two parameters and by using long term debt to total assets, we see a positive impact.

Keywords: Financial Leverage, Firm Investment, Growth Opportunities, Under-investment, Over-investment
Full-Text [PDF 342 kb]   (1891 Downloads)    
Type of Study: Research | Subject: Economics
Received: 2016/06/25 | Accepted: 2016/06/25 | Published: 2016/06/25
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Eghbalnia M, Fadayinejad M E, Noferesti M. The Impact of Leverage on Firm Investment: Evidence from Tehran Stock Exchange . J. Mon. Ec.. 2013; 8 (4) :59-73
URL: http://jme.mbri.ac.ir/article-1-168-en.html

Volume 8, Issue 4 (fall 2013) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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