The Relationship between Company's Characteristics and its Capital structure in Listed firms of Tehran Stocks Exchange

Minimizing the cost of capital and increasing the value of the firms’ stocks were one of the most important and key debates of the previous decades. Effective factors on financial managers’ visions in relation to sources and uses of capital were determined based on the internal characteristics of the organization and also the external environment. The present study investigated the effect of company’s characteristics such as size, asset structure, profitability, expected growth, interest coverage ratio, quick ratio and return on assets (ROA) on the capital structure of 103 listed firms of Tehran Stocks Exchange over the period of 1381-1387 using screen sampling method. To do so, a combination of panel and time series data were used for evaluation and testing. At the beginning of the evaluation, Hussman and F tests have been applied for estimating the method in order to select the best model among the ordinary combined data, namely the fixed and random effects. In this research, Eviews 6 and Excel softwares have been applied to estimate the variables. The results showed a negative and significant relationship among firm’s debts, asset structure (fixed assets to total assets ratio), profitability (marginal profit before interest and tax), and market value to book value, quick ratio and return on assets (ROA). In addition, there is a positive and significant relationship between firm’s capital structure, size and interest coverage ratio.