This study is an empirical analysis of the financing effect on the Capital Structure of the company. For this purpose and in terms of financing methods, first we have divided companies into two groups, including Corporations with much leverage in their capital structure and corporations with high stock issuance. Then we analyzed them by using the capital asset pricing model and capital structure theories. All of this research has been made in connection with the listed companies in Tehran Stock Exchange from 2006 to 2009. With Utilization of CAPM, we calculate risks and expected returns of two groups and compare the results to each other and market. We used statistical tests to examine assumptions, including F Levine and T student and other required tests. Results showed that the companies which have financed via issuance of stock have got less risk and higher return. Hereon this group of companies had a better performance against systematic risk and more value creation for its shareholders.
This study empirically analyzes the impact of financing methods on a company’s capital structure. To achieve this, companies listed on the Tehran Stock Exchange from 2006 to 2009 were categorized into two groups: those with high leverage and those with high stock issuance. Their performance was then evaluated using the Capital Asset Pricing Model (CAPM) and capital structure theories. By applying CAPM, we calculated the risks and expected returns for both groups and compared them to each other and the market. Statistical tests, including F-Levene and Student’s t-test, were used to validate the assumptions. The results indicate that companies financing through stock issuance exhibited lower risk and higher returns. Consequently, this group demonstrated better performance against systematic risk and created more value for shareholders.
Source verification: The original article PDF identifies International Journal of Academic Research, Vol. 3, No. 1, January 2011, Part I, pp. 309-316, and provides SSRN abstract 1967377. No journal DOI is shown in the source PDF.
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