Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach
<strong>Objective</strong>: The purpose of this study is to investigate the effect of financial distress on the relationship between earning volatility and capital structure decisions using Structural Equations Modeling (SEM) Approach. <br /><strong>Methods: </strong>Fo...
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| Format: | Article |
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University of Tehran
2018-06-01
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| Series: | تحقیقات مالی |
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| Online Access: | https://jfr.ut.ac.ir/article_67700_cfbc1e4d7282dfc0b50f2da119882d93.pdf |
| _version_ | 1818041451221614592 |
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| author | Mehdi Heidari Gholamreza Mansourfar Mortaza Ghasemzade |
| author_facet | Mehdi Heidari Gholamreza Mansourfar Mortaza Ghasemzade |
| author_sort | Mehdi Heidari |
| collection | DOAJ |
| description | <strong>Objective</strong>: The purpose of this study is to investigate the effect of financial distress on the relationship between earning volatility and capital structure decisions using Structural Equations Modeling (SEM) Approach. <br /><strong>Methods: </strong>For this purpose, a sample of 82 companies were selected among the companies accepted by Tehran Stock Market between 2006 and 2017. To measure the moderating effect of financial distress, the sample companies were classified into two groups based on the KZ model. To measure the earning volatility, the researchers used observable variables such as coefficient of variation of ROE, coefficient of variation of OI divided by total assets and standard deviation of the percentage change in operating income. Also, we used three measures of total debt divided by total assets, total debt divided by book value of equity and total debt divided by market value of equity to measure the capital structure value. <br /><strong>Results: </strong>After ensuring the acceptable process of the research measurement and structural models, the results indicated that earning volatility has a significantly negative impact on capital structure decisions and financial distress significantly affect the relationship between earning volatility and capital structure. Moreover,such a relationship is proved stronger in the unconstrained companies group. <br /><strong>Conclusion:</strong> The effect of earning volatility on capital structure decisions is stronger in sound Companiescompared to financially distressed holding Companies. |
| first_indexed | 2024-12-10T08:30:38Z |
| format | Article |
| id | doaj.art-d6025e05d649420cbe395dd637ce6c10 |
| institution | Directory Open Access Journal |
| issn | 1024-8153 2423-5377 |
| language | fas |
| last_indexed | 2024-12-10T08:30:38Z |
| publishDate | 2018-06-01 |
| publisher | University of Tehran |
| record_format | Article |
| series | تحقیقات مالی |
| spelling | doaj.art-d6025e05d649420cbe395dd637ce6c102022-12-22T01:56:06ZfasUniversity of Tehranتحقیقات مالی1024-81532423-53772018-06-0120222724810.22059/frj.2018.257571.100666067700Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling ApproachMehdi Heidari0Gholamreza Mansourfar1Mortaza Ghasemzade2Assistant Prof., Accounting Department, Faculty of Economic and Management, Urmia University, Urmia, IranAssociate Prof., Accounting Department,Faculty of Economic and Management, Urmia University, Urmia, IranMSc. Student of Finance., Faculty of Economic and Management, Urmia University, Urmia, Iran<strong>Objective</strong>: The purpose of this study is to investigate the effect of financial distress on the relationship between earning volatility and capital structure decisions using Structural Equations Modeling (SEM) Approach. <br /><strong>Methods: </strong>For this purpose, a sample of 82 companies were selected among the companies accepted by Tehran Stock Market between 2006 and 2017. To measure the moderating effect of financial distress, the sample companies were classified into two groups based on the KZ model. To measure the earning volatility, the researchers used observable variables such as coefficient of variation of ROE, coefficient of variation of OI divided by total assets and standard deviation of the percentage change in operating income. Also, we used three measures of total debt divided by total assets, total debt divided by book value of equity and total debt divided by market value of equity to measure the capital structure value. <br /><strong>Results: </strong>After ensuring the acceptable process of the research measurement and structural models, the results indicated that earning volatility has a significantly negative impact on capital structure decisions and financial distress significantly affect the relationship between earning volatility and capital structure. Moreover,such a relationship is proved stronger in the unconstrained companies group. <br /><strong>Conclusion:</strong> The effect of earning volatility on capital structure decisions is stronger in sound Companiescompared to financially distressed holding Companies.https://jfr.ut.ac.ir/article_67700_cfbc1e4d7282dfc0b50f2da119882d93.pdfcapital structureearning volatilityfinancial distressstructural equations |
| spellingShingle | Mehdi Heidari Gholamreza Mansourfar Mortaza Ghasemzade Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach تحقیقات مالی capital structure earning volatility financial distress structural equations |
| title | Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach |
| title_full | Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach |
| title_fullStr | Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach |
| title_full_unstemmed | Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach |
| title_short | Earning Volatility and Capital Structure Decisions considering the Moderating Role of Financial Distress;A Structural Equations Modeling Approach |
| title_sort | earning volatility and capital structure decisions considering the moderating role of financial distress a structural equations modeling approach |
| topic | capital structure earning volatility financial distress structural equations |
| url | https://jfr.ut.ac.ir/article_67700_cfbc1e4d7282dfc0b50f2da119882d93.pdf |
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