The Effect of Uncertainty of Macroeconomic and Company-Specific on Leverage of Listed Companies in Tehran Stock Exchange: The Direct and Indirect Effects

Undoubtedly, the optimal arrangement of capital structure is one of the most important financial manager's tasks. This leads to a balance between uncertainty in the company and maximum returns of correct policies about the capital structure. Therefore, identifying of effective factors in the capital structure is essential. This paper aims to study the direct and indirect effect of macroeconomic and company-specific uncertainty on the leverage ratio of companies with using Static and Dynamic Trade-off Theory. Fixed-effects panel regression was used for the static trade-off theory, while dynamic panel regression and Generalized Moment Estimators were employed for the dynamic trade-off theory. The Selected Sample of data includes 153 listed companies in Tehran Stock Exchange for the period of 2001 to 2013. The results of estimated models show a positive and significant relationship between company-specific uncertainty and the leverage ratio of companies in static mode. They also show a negative and significant relationship between both kinds of uncertainty and the leverage ratio of companies in dynamic mode. Macroeconomic and company-specific uncertainty have affected on leverage ratio by profitability channel in the dynamic model. It has positive and negative effects, respectively.