Review The Relationship between Cost of Debt and Surplus Return with Moderating effects of Investment Opportunities

One of the main objectives of the management of the enterprise is to increase the shareholder's wealth as well as increase the value and stock return. Many factors affect the stock return of companies, which one of these factors is choosing the right financing method. The main object of this research is to review the relationship between cost of debt and surplus return with the moderating effect of investment opportunities. The data of 91 listed companies at Tehran stock exchange during 2009-2017 analyzed with multiple regression and panel data approach. The results showed that financing costs have a positive and significant relationship with the surplus return. Also, investment opportunities have a significant and positive relation with surplus return and the moderating effect of an investment opportunity on this relation is negative and significant. Investment opportunities as a moderator variable decrease the relation between cost of debt and surplus return.
Contribution: The explanation of the relationship between the cost of debt and investment opportunities with the surplus stock returns can provide a deeper understanding of the relationship between capital structure and valuable investment opportunities of the company.