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The Effects of Product Market Competition on Capital Structure in firms listed in Tehran Stock Exchange, Iran

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Author Affiliations

  • 1Islamic Azad University, Persian GULf International Educational Branch, Khuzestan, IRAN

Res. J. Recent Sci., Volume 3, Issue (4), Pages 7-13, April,2 (2014)

Abstract

The present study mainly evaluates the effect of product market competition on capital structure of companies listed in Tehran Stock Exchange (TSE) during 2001-2009. The present study discussed level and dimensions of product market competition including Tobin’s Q ratio, substitutability of goods, barriers to entry, inventory turnover, market share, number of active companies and capital structure. The present study used systematic elimination method to collect samples. Considering the sampling method, 87 companies were selected from companies listed in TSE. Results showed a positive significant relationship between product market competition, market share and capital structure as well as a negative significant relationship between barriers to entry (investment intensity) and capital structure. Moreover, there was no significant relationship between Tobin’s Q ratio, inventory turnover, substitutability of goods, number of active companies and capital structure.

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