Capital structure and firm performance: Evidence from Iranian companies

Ali Saeedi, Iman Mahmoodi

Research output: Contribution to journalArticlepeer-review

35 Scopus citations


This study examines the relationship between capital structure and firm performance. The study uses four performance measures (including return on assets, return on equity, earning per share, and Tobin's Q) as dependent variable and three capital structure measures (including long-term debt, short-term debt and total debt ratios) as independent variable. The investigation is performed using panel data procedure for a sample of 320 listed companies in the Tehran Stock Exchange (TSE) over the period 2002- 2009. The results indicate that firm performance, which is measured by EPS and Tobin's Q, is significantly and positively associated with capital structure, while report a negative relation between capital structure and ROA. Moreover, there is no significant relationship between ROE and capital structure. Altogether, our study provides evidence that indicates firm performance is positively or even negatively related to capital structure.

Original languageEnglish (US)
Pages (from-to)20-29
Number of pages10
JournalInternational Research Journal of Finance and Economics
StatePublished - Jul 2011
Externally publishedYes


  • Capital structure
  • Firm Performance
  • Panel Data
  • Tehran Stock Exchange


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