Investigating the impact of operating debt leverage on the future return on equity of companies listed on the Tehran Stock Exchange

Number of pages: 140 File Format: word File Code: 32215
Year: 2011 University Degree: Master's degree Category: Librarianship
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  • Summary of Investigating the impact of operating debt leverage on the future return on equity of companies listed on the Tehran Stock Exchange

    Dissertation for Master's degree

    Direction: Accounting

    Abstract:

    Financing is one of the most important controversial topics in financial management and accounting, which has caused extensive research in the field of finance and accounting. Despite the wide range of financing methods, managers should be aware of the financing method and the effect of using each of them on the operational performance, profitability and future returns of the companies' shares. Based on this, in this research, the effect of operating debt leverage as one of the main financing tools on the future return on equity in 110 companies admitted to the Tehran Stock Exchange during the years 1383 to 1388 has been investigated. The statistical method of the research is a descriptive one based on regression analysis using the combined data analysis method. The findings show that there is a significant positive relationship between operating debt leverage and contractual debt leverage with the future return on equity of companies, and total leverage also adjusts the relationship between operational debt leverage and future return on equity. In addition to filling the research gap in this field, the findings of this research are useful for managers and investors.

    Key words: operational debt leverage, contractual debt leverage, estimated debt leverage, future return on equity

     

    Introduction:

    In the real world where businesses and economic companies operate, optimizing financial resources is one of their most important issues. Optimizing financial resources maximizes returns with the lowest capital cost. Companies do not use only one source (capital or debt) for financing; Rather, they use a combination of them. The important thing is that in order to achieve their main goals, companies should choose which financial sources and how much of that source they should use in their capital mix. Certainly, identifying different ways of financing and using suitable financial tools will help the management in making more correct decisions and obtaining more benefits for the companies, and the optimal use of financial resources will give managers the opportunity to increase the overall value of the company and the wealth of the capital owners.

    Until now, an absolute model for the optimal capital structure has not been provided, but to achieve such a model, many researches and studies have been done. The result of this research is presenting the facts, determining or knowing the costs, and identifying the weaknesses and strengths of the ways that companies support themselves financially. In this research, an attempt is made to investigate the effect of financing from operating debts on the future return on equity of companies listed on the Tehran Stock Exchange, so that by collecting real information, financial managers as well as investors can use these results.

    Introduction

    In order to provide the necessary funds for their capital expenditures and operations, companies take financing from various sources and They provide the funds they need. The financial theory of companies is based on the assumption that the goal of management is to maximize the market value of a company and, as a result, to maximize the wealth of shareholders. Therefore, decisions related to financial structure and capital, as well as determining and choosing the best method of financing are among the duties of financial managers. Financing can be done through debt or issuing shares. Some theories have addressed why companies choose certain financing methods and how such choices are reflected in the company's past and future performance. However, many studies have been done on different financing methods and their effects on returns and stock prices and other variables in companies. The results of the research show that the performance of companies is related to the use and type of external financing of the company. Also, the type of financing (through capital or debt) has different effects on the performance of companies.

    In this research, the effect of operating debt leverage[1] on the future return on equity[2] of companies admitted to the Tehran Stock Exchange is investigated. In addition to filling the research gap in this field, the findings of this research also provide useful information for managers and stakeholders. Because on the one hand, it helps managers in fulfilling their responsibilities, such as deciding on the appropriate financing method and maximizing the value of the company, which is the goal of every for-profit institution and organization, and on the other hand, it gives investors and shareholders awareness and knowledge in decision-making. It has given the definitions of words and terms and the research structure.

    Abstract:

    One ??of the most important controversial subjects in finance and accounting is method of financing that caused widely research. In spite of spreading methods of financing, managers should be aware of the manner of financing and the effect of their application on the profitability of companies' future stock returns. Based on this research to consider the effect of operating liability leverage one of the main tools in financing on Future Return on Equity, It selected 110 companies in stock exchange of Tehran during 1383-1388. The statistical method of research is descriptive based on regression analysis on panel data analysis. The result shows that there is a positive significant relationship between operating liability leverage and contractual operating liability with Future Return on Equity. Total leverage causes adjustment of relationship between operating liability leverage and Future Return on Equity. The finding of this research fills the research gap as well as being useful for managers and investors.

  • Contents & References of Investigating the impact of operating debt leverage on the future return on equity of companies listed on the Tehran Stock Exchange

    List:

    Abstract: 1

    Introduction: 2

    Chapter One: General Research

    1-1 Introduction. 4

    2-1 Study history. 5

    3-1 Statement of the research problem. 6

    4-1 Importance and necessity of research. 6

    5-1 research objectives. 7

    6-1 research assumptions. 8

    7-1 Scope of research. 8

    8-1 Definition of specialized research terms. 9

    Chapter Two: Review of Research Literature

    1-2 Introduction. 11

    2-2 stock market. 12

    3-2 The main reasons for financing companies. 12

    4-2 Financing methods. 13

    1-4-2 Short-term financing. 13

    2-4-2 Long-term financing. 13

    5-2 Financing from operating debts. 14

    1-5-2 contractual operating liabilities. 15

    1-1-5-2 Commercial Credits (Commercial Accounts Payable) 15

    1-1-1-5-2 Cost of Commercial Credits. 15

    2-1-1-5-2 The cost of not using the discount. 16

    3-1-1-5-2 Delay in payment. 16

    4-1-1-5-2 Commercial credit as a means of financing. 16

    2-1-5-2 Payable documents. 17

    3-1-5-2 Other payable accounts and documents. 17

    4-1-5-2 before receiving from customers. 17

    2-5-2 Estimated operating liabilities (reserves) 18

    1-2-5-2 Reserve for deferred expenses. 19

    2-2-5-2 tax reserve. 19

    3-2-5-2 Save employee termination benefits. 19

    6-2 Financing from financial debts. 20

    1-6-2 Short-term financial liabilities. 20

    1-1-6-2 Commercial bonds (short-term scrap bonds) 21

    1-1-1-6-2 Commercial bonds as one of the financing tools. 21

    2-1-6-2 Short-term bank loans. 22

    3-1-6-2 Pledge of accounts receivable. 22

    4-1-6-2 Pledge of goods inventory. 23

    2-6-2 medium-term and long-term financial liabilities. 23

    1-2-6-2 Long-term bank loans. 24

    2-2-6-2 loans from insurance companies and other credit institutions. 24

    3-2-6-2 Equipment financing. 24

    4-2-6-2 mortgage debts. 24

    5-2-6-2 Bonds. 25

    1-5-2-6-2 types of bonds. 25

    6-2-6-2 Advantages and disadvantages of financing through long-term debt. 26

    7-2 Description of return and its types. 28

    1-7-2 Share returns. 28

    2-7-2 Expected return of a share. 30

    3-7-2 return on equity or equity. 30

    4-7-2 Asset return. 31

    5-7-2 Investment returns. 31

    8-2 Financing opinions and theories. 32

    1-8-2 Traditional theory. 32

    2-8-2 Modigliani and Miller theory. 33

    3-8-2 Tax and theory of Modigliani and Miller. 34

    4-8-2 Bankruptcy costs and Modigliani and Miller's theory. 34

    5-8-2 agency fees. 34

    6-8-2 Theory of static or stable balance. 35

    7-8-2 Information asymmetry theory. 36

    8-8-2 The theory of the hierarchy of financing options (preferred theory) 37

    9-2 A brief overview of studies and research. 39

    1-9-2 A brief overview of foreign studies. 40

    2-9-2 A brief overview of domestic studies. 42

    Chapter 3: Research Implementation Method

    1-3 Introduction. 47

    2-3 research methods. 47

    3-3 research variables. 48

    1-3-3 independent variable. 48

    2-3-3 dependent variable. 48

    3-3-3 control variable. 49

    4-3 conceptual model of research. 50

    5-3 research objectives. 50

    6-3 research assumptions. 51

    7-3 Statistical population and research sample. 52

    8-3 The method of collecting information. 52

    3-9 Data analysis method: 53

    3-10 descriptive statistics. 53

    11-3 The necessary regression tests are presented in the following three sections: 53

    3-12 Regression of research assumptions is as follows: 56

    3-13 Introduction of Eviews software 57

    14-3 Types of data. 57

    3-15-3 time series composite data model (panel) 58

    3-16 types of models used in composite data. 58

    3-17 Regression analysis. 59

    18-3 Classical assumptions. 60

    Chapter Four: Data Analysis

    1-4 Introduction. 64

    2-4 descriptive statistics. 64

    3-4 testing research hypotheses. 66

    1-3-4 collinearity test between variables and data normality. 66

    2-3-4 checking the heterogeneity of variance.67

    3-3-4 Checking of autocorrelation. 68

    4-3-4 F test and Hausman test. 68

    5-3-4 regression analysis (hypothesis testing process) 69

    1-5-3-4 main hypothesis testing. 71

    2-5-3-4 test of secondary hypotheses. 72

    1-2-5-3-4 test of the first sub-hypothesis: 72

    2-2-5-3-4 test of the second sub-hypothesis: 72

    3-2-5-3-4 test of the third sub-hypothesis: 73

    4-2-5-3-4 test of the fourth sub-hypothesis: 73

    4-4 output equation of the research model. 74

    Chapter Five: Conclusion and Suggestions

    5-1 Introduction. 76

    2-5 Evaluating and explaining the results of hypothesis testing. 76

    1-2-5 main hypothesis. 76

    2-2-5 The first sub-hypothesis. 77

    3-2-5 Second sub-hypothesis. 77

    4-2-5 The third sub-hypothesis. 78

    5-2-5 The fourth sub-hypothesis. 78

    3-5 general conclusions of the research. 78

    4-5 suggestions based on research findings. 80

    5-5 Suggestions for future research. 80

    6-5 research limitations. 80

    Attachments

    Software output. 83

    Sources and sources

    Persian sources: 88

    Latin sources: 91

    Latin summary. 93

     

    Source:

     

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Investigating the impact of operating debt leverage on the future return on equity of companies listed on the Tehran Stock Exchange