Deviation from Optimal Capital Structure and Inefficiencies of Investment

Objective: Investment efficiency is one important factor affecting a firm's performance. Also, financing decisions affect investment decisions, regarding the effects of the non-optimal capital structure on the rate of capital cost and cash flows of the firm. This study examines the relationship...

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Autores principales:	Fatemeh Soheilyfar, Mohammad Ramezan Ahmadi, Alireza Jorjor zadeh, Saeid Nasiri
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2020
Materias:	optimal capital structure inefficiency of investment over-investment under-investment Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/35357a7b69e2442db21e66c1e748a06c
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spelling	oai:doaj.org-article:35357a7b69e2442db21e66c1e748a06c2021-11-04T19:56:10ZDeviation from Optimal Capital Structure and Inefficiencies of Investment2008-89142476-292X10.22103/jak.2020.13651.2934https://doaj.org/article/35357a7b69e2442db21e66c1e748a06c2020-07-01T00:00:00Zhttps://jak.uk.ac.ir/article_2515_717d389aecafaa008b13a74f851db76f.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XObjective: Investment efficiency is one important factor affecting a firm's performance. Also, financing decisions affect investment decisions, regarding the effects of the non-optimal capital structure on the rate of capital cost and cash flows of the firm. This study examines the relationship between deviation from optimal capital structure and inefficiency of investment. Methods: This is a descriptive, correlation, and post-event study. The statistical population consists of the companies listed in the Tehran Stock Exchange, and the sample comprises 142 companies during 2007-2017, accounting for 1562 company-years. Results: The findings showed that an increase in the deviation from optimal capital structure increases investment inefficiency. Also, an increase in the positive deviation from optimal capital structure (over-leveraged) has a significant and negative effect on over-investment and a positive effect on under-investment. Besides, an increase in the negative deviation from optimal capital structure (under-leveraged) has a significant and positive effect on over-investment and negative effect on under-investment. Conclusion: The results imply that the optimal capital structure can affect investment efficiency by moderating the cash flow availability and the expected interest rate.Fatemeh SoheilyfarMohammad Ramezan AhmadiAlireza Jorjor zadehSaeid NasiriShahid Bahonar University of Kermanarticleoptimal capital structureinefficiency of investmentover-investmentunder-investmentAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 11, Iss 2, Pp 107-137 (2020)
institution	DOAJ
collection	DOAJ
language	FA
topic	optimal capital structure inefficiency of investment over-investment under-investment Accounting. Bookkeeping HF5601-5689
spellingShingle	optimal capital structure inefficiency of investment over-investment under-investment Accounting. Bookkeeping HF5601-5689 Fatemeh Soheilyfar Mohammad Ramezan Ahmadi Alireza Jorjor zadeh Saeid Nasiri Deviation from Optimal Capital Structure and Inefficiencies of Investment
description	Objective: Investment efficiency is one important factor affecting a firm's performance. Also, financing decisions affect investment decisions, regarding the effects of the non-optimal capital structure on the rate of capital cost and cash flows of the firm. This study examines the relationship between deviation from optimal capital structure and inefficiency of investment. Methods: This is a descriptive, correlation, and post-event study. The statistical population consists of the companies listed in the Tehran Stock Exchange, and the sample comprises 142 companies during 2007-2017, accounting for 1562 company-years. Results: The findings showed that an increase in the deviation from optimal capital structure increases investment inefficiency. Also, an increase in the positive deviation from optimal capital structure (over-leveraged) has a significant and negative effect on over-investment and a positive effect on under-investment. Besides, an increase in the negative deviation from optimal capital structure (under-leveraged) has a significant and positive effect on over-investment and negative effect on under-investment. Conclusion: The results imply that the optimal capital structure can affect investment efficiency by moderating the cash flow availability and the expected interest rate.
format	article
author	Fatemeh Soheilyfar Mohammad Ramezan Ahmadi Alireza Jorjor zadeh Saeid Nasiri
author_facet	Fatemeh Soheilyfar Mohammad Ramezan Ahmadi Alireza Jorjor zadeh Saeid Nasiri
author_sort	Fatemeh Soheilyfar
title	Deviation from Optimal Capital Structure and Inefficiencies of Investment
title_short	Deviation from Optimal Capital Structure and Inefficiencies of Investment
title_full	Deviation from Optimal Capital Structure and Inefficiencies of Investment
title_fullStr	Deviation from Optimal Capital Structure and Inefficiencies of Investment
title_full_unstemmed	Deviation from Optimal Capital Structure and Inefficiencies of Investment
title_sort	deviation from optimal capital structure and inefficiencies of investment
publisher	Shahid Bahonar University of Kerman
publishDate	2020
url	https://doaj.org/article/35357a7b69e2442db21e66c1e748a06c
work_keys_str_mv	AT fatemehsoheilyfar deviationfromoptimalcapitalstructureandinefficienciesofinvestment AT mohammadramezanahmadi deviationfromoptimalcapitalstructureandinefficienciesofinvestment AT alirezajorjorzadeh deviationfromoptimalcapitalstructureandinefficienciesofinvestment AT saeidnasiri deviationfromoptimalcapitalstructureandinefficienciesofinvestment
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Deviation from Optimal Capital Structure and Inefficiencies of Investment

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