Indian Journal of Science and Technology
Year: 2015, Volume: 8, Issue: 27, Pages: 1-13
Mojtaba Rezaei 1 and Seyedeh Mahbobeh Jafari 2
1 Department of Accounting, College of Humanities, Zahedan Branch, Islamic Azad University, Zahedan, Iran
2 Department of Accounting, College of Management and Accounting, South Tehran Branch, Islamic Azad University, South Tehran, Iran
Given that companies are growing in today’s world and have to compete with multiple agents and expand their activities through new financing in order to survive, they turn toward funding. The important thing is that how debt and generated cash flows affect each other. In fact, decisions regarding capital structure affect cash flow and financial leverage. The aim of this study is to find out whether there is a significant relationship between cash flow (other independent variables) and financial leverage. Independent variables included: cash flow, investments, profitability, Tobin’s Q ratio, current ratio, tangible assets, cash stock and dividends. Among the companies listed in Tehran Stock Exchange during 2009 to 2013, 91 companies were selected by systematic eliminating sampling method. The statistical method used to test the proposed hypothesis in this study is multivariate regression using panel data. The results show that there is a negative significant relationship between cash flows and other variables and financial leverage.
Keywords: Capital Structure, Cash Flow, Financial Leverage
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