Financial and Non-financial Factors Effective on Capital Structure Decisions

The main objective of this paper is to investigate the role of financial and non-financial factors effective on capital structure decisions. The sample includes 74 firms listed in the Tehran Stock Exchange through the years of 2005 to 2010. Regression method and OLS technique are used to test the hypothesis and three criteria are applied to measure capital structure. Results show that return on assets has negative and significant relation with leverage but firms'' size has significant positive relationship with leverage in all cases. Also uniqueness of product، assets growth and sales growth rates are found to have significant positive relation with leverage in many cases. Other factors like dividend pay-out ratio and collateral value of assets have no significant relation with leverage.