Determinants of Corporate Capital Structure of Iranian Manufacturing Firms

Purpose: This study present empirical evidence on the determinants of corporate capital structure of non-financial firms in Iran based on firm specific data. The paper attempts to answer the question of what determines the capital structure of non-financial firms listed in Tehran Stock Exchanges (TSE). Design/methodology/approach: For the purpose of the study the panel data analysis is done to examine the association of leverage on some specific data i.e., size, tangibility of fixed assets, profitability and growth opportunities. The study period and sample firms are five years from 2004 to 2009 and 268, respectively. Findings: we found that tangibility and profitability are the main matter in determination of capital structure of Iranian firms. The results shown that asset tangibility is significant positively correlated with leverage. Strong negative relationship also was found between profitability and leverage. The size and growth variables also are positive correlated with leverage; however, these relationships are not statistically significant.