The Impact of Moral Hazard on Capital Structure

On the basis of Pecking Order Theory, when firms need resources they usually rely on debts since capital is considered expensive due to information asymmetry. Moral hazard is a kind of information asymmetry; therefore, it is expected that it has relationship with capital structure. The purpose of this study is to investigate the impact of moral hazard on capital structure. In order to conduct the research 132 firms were selected from listed firms in Tehran Stock Exchange between years 2006_2012.research hypothesis was tested using structural equation model. The results show that moral hazard has significant negative impact on capital structure, and the negative effect of moral hazard on capital structure is moderated by control variables.