Investigating the relationship between macroeconomic variables and capital structure in Iran's capital market

Dissertation for Master's degree

Orientation: Accounting

Abstract:

Economic information in countries is considered as important and influential information, which is one of the most used cases of this information in the capital markets of countries. Financial managers of companies consider all aspects in making decisions and planning in the field of optimizing the capital structure, and one of these aspects is the economic conditions of the company's environment.

In this research, the inflation rate, liquidity rate, bank interest rate, and dollar rate are mentioned as economic variables, and its relationship with the capital structure, which is the same as the debt ratio in companies, is examined, and for this purpose, the information of Iran's capital market companies and Central Bank website during the years 1384 to 1388 The selection and testing of hypotheses was analyzed with SPSS software with the help of descriptive and inferential statistics such as correlation analysis, and the results obtained in this research indicate that there is no relationship between macroeconomic variables and capital structure in Iran's capital market, which with the introduction of control variables such as return on total assets, return on equity, profit per share, and fixed assets, this relationship became significant, which is due to the lack of stability in the country's economic situation, which financial managers of companies They cannot have an accurate estimation of the country's future so that they can use it in financial decisions. In this connection, the most important factor in the decision-making process is information. Information can have a significant impact on the decision-making process. Because it causes different people to make different decisions. In companies, capital structure decisions are also affected by information. Economists consider economic information as one of the sources of information for financial managers. For this reason, one of the goals of preparing economic variables is to provide information in order to facilitate decision-making.

In developed countries, due to the existence of economic stability, economic conditions in the future can be predicted for most people and companies, and taking these conditions into account, they try to optimize their decisions, but in underdeveloped or developing countries, this is out of the question or impossible due to fluctuations and turbulence in the economic environment, and during various researches, the relationship between macroeconomic variables and variable Accounting methods have been investigated and evaluated. In this research, we are also looking for an answer to the question of whether macroeconomic variables have an effect on the capital structure in Iran's capital market or not. Therefore, the main approach in this research is the experimental test of the effect of economic variables with the debt ratio.

1-1 Introduction

Undoubtedly, today most of the capital is exchanged through the capital markets in the countries and the economy and the capital market are undoubtedly and strongly influenced by each other. And what is of particular importance for investors is to increase their wealth in the shortest time, and with the separation of company management from investors and the discussion of agency theory [1], management decisions benefit from a high reflection among shareholders, and among these decisions are the financial decisions and financing strategies of managers in companies, according to the decisions of managers in the field of financing, different costs are imposed on the company, which ultimately affects the profitability and efficiency of companies. The discussion of capital structure [2] and choosing the type of financing is one of the concerns of managers in companies, and researchers have conducted many studies in connection with choosing the optimal capital structure and type of financing and many factors from inside and outside the company that affect it, and macroeconomic variables [3] are among these external factors.. In view of this, in developing countries including Iran, these macroeconomic variables have been very volatile during the past three decades, and it is very clear that these fluctuations have an adverse effect on the economy and the capital market. They have undoubtedly cast a shadow on the decisions of managers and made them face serious doubts in this matter. Now, in the rest of this chapter, we will examine the statement of the problem, the background of the research, the main and secondary assumptions, the importance of the subject, the method of gathering information, and the context.

2-1 Study history

Internal studies:

Sinai examined the impact of company characteristics on capital structure and mentioned company size, profitability, growth opportunities and tangible assets as the most important internal company parameters affecting the financial leverage of companies. (Sinai, 1384, p. 120) 8

Namazi, in a research entitled Investigating the relationship between capital structure and profitability in companies listed on the Tehran Stock Exchange, generally came to the conclusion that there is a positive relationship between capital structure and profitability of companies, and this relationship is also influenced by the type of industry.     (Namazi, 1384, p. 139) 10

Neamiti compared the determinants of capital structure in Iran with Southeast Asian countries and came to the conclusion that in our country, as in Southeast Asian countries, there is a positive relationship between the ratio of fixed assets to total assets and the size of the company in relation to capital structure, and there is a negative relationship between profitability and current ratio with capital structure. (Nomati, 1388, p. 176) 9

Sajadi, in his research on the impact of macroeconomic variables on the total stock index in the Tehran Stock Exchange, has found a negative relationship between the inflation rate and liquidity with the growth rate of the stock price index. (Sajadi, 1389, p. 204) 7

Partners brothers in the research on the relationship between macroeconomic variables with major accounting variables have found a weak relationship between the growth of macroeconomic variables with major accounting indicators including return on equity and return on assets due to the use of the historical cost principle. (Partners, 1386, p. 195) 6

Foreign researches:

Ariotis in a research investigated the effect of the characteristics of companies on their capital structure in Greece and found a meaningful relationship between the instantaneous ratio and interest rate and the value of the company with the capital structure [4]. It has been found that there is a significant relationship between the gross domestic product and the interest rate by deciding on the capital structure and financial leverage in companies[5].

Emran has studied in a research titled capital structure and characteristics of companies in Egypt, and in the conclusion of this research, he mentioned the existence of a positive relationship between the capital structure and the size of the company[6]. Thabit refers to the capital structure or the amount of long-term debt to the total assets in the companies[7].

In his research, Viviani investigates the factors that determine and affect the capital structure of commercial companies in France, and the amount of long-term debt in companies is different depending on the type of industry[8]. The growth rate and asset structure, the size of banks has reached the capital structure[9].

3-1. Statement of the problem

Currently, the issue of the impact of macroeconomic variables on capital markets is one of the topics discussed among academics, economists, company managers, etc. and generally all groups are aware of the impact of macroeconomic variables on the stock market.

On the other hand, the issue of capital structure in any company is one of the most controversial issues in the field of corporate finance, which always requires special attention from the managers on the ratio of debt to assets.