A Study about the Relationship between Capital Structure of Firms and Systematic Risk in

This research has been conducted to study the relation between capital structure (to lay emphasis on financial leverage criterions) and systematic risk. Financing decisions, optimum mix of capital structure as well as corporate risk, especially debts payment related risk, are some of the most important factors which affect management decisions. In this research we are trying to answer the question: “Does financial leverage which is derived from debt financing, affect systematic risk? Results show that using financial leverage and variations of leverage degree have a light influence on systematic risk. Ineluctable to state that, in meaningful level of 90% and 95%, there is no relation between financial leverage and systematic risk. The used indicators for financial leverage include ratio of long-term debt on stockholders contribution, ratio of total debts on stockholders contribution, ratio of long-term debts on total assets, ratio of total debts on total assets, ratio of EPS changes on percentage of operational profit changes, ratio of operational profit on EBT, that their relations with systematic risk have been studied separately. Results specify that the second hypothesis has been approved, so there is a positive relation between ratios of total debts on stockholders contribution with systematic risk. On the other hand, 5 remained hypotheses including ratio of long-term debts on stockholders contribution, ratio of long-term debts on total assets, ratio of total debts on total assets, ratio of EPS changes on percentage of operational profit changes and ratio of operational profit on EBT have been rejected.