The Impacts of Financial Structure on Financial Performance of Banks listed in Tehran Stock Exchange: An Empirical Application
محورهای موضوعی : Financial Mathematics
Esmaeil Balouei
1
(Department of Financial Management, Faculty of Management, UAE Branch, Islamic Azad University, Dubai, UAE.)
Ali Asghar Anvary Rostamy
2
(Department of Planning & Management, Tarbiat Modres University, Tehran, Iran.)
Seyyed Jalal Sadeghi Sharif
3
(Faculty of Management & Accounting, Shahid Beheshti, University, Tehran, Iran)
Ali Saeedi
4
(Department of Accounting, Faculty of Management, Tehran Northen Branch, Islamic Azad University, , Tehran, Iran)
کلید واژه: Tehran Stock Exchange, ROE, Financial Structure, ROA,
چکیده مقاله :
Financial structure is a combination of debt and equity and regards as one of the most important issues in banking industry. The purpose of financial structure decision is to create an appropriate combination of financing resources to minimize the cost of capital and thus maximize the company's market value. This study investigates the impacts of banks financial structure on their Returns (ROA and ROE). In addition, it investigates the moderating roles of corporate governance, financial constraints, capital intensity and size. This research is an applied descriptive correlational research. To test the hypotheses, unbalanced panel data is used. The financial data extracted from “Rah Avarde Novin" software and the database of "Tadbir Pardaz" company. The statistical population includes all banks listed on Tehran Stock Exchange during the years 2009 to 2016. The results indicate a positive significant impacts of financial structure and the banks’ ROA and ROE. Moreover, the results show that capital intensity and the size significantly moderate the relation between financial structure with ROA and ROE.
[1] Abdul Rahman, R., Ali, F.H., Board, audit committee, culture and earnings management: Malaysian evidence. Managerial Auditing, 2006, 21(7), P.783-804.
[2] Akbar, S., Poletti-Hughes, J., El-faitouri, R., Alishah, S.Z., More on the relationship between corporate governance and firm performance in the UK: Evidence from the application of generalized method of moments estimation. Research in International Business and Finance, 2016, 38(c), P.417-429.
[3] Al-Nasser Abdullah, A., Ismail, A.K., Corporate governance practices, ownership structure, and corporate performance in the GCC Countries. Journal of International Financial Markets, Institutions & Money, 2017, 46, P.98-115.
[4] Amiri, S., Amiri, A., Sedeg, S., Impact assessment mechanisms of corporate governance and financial restrictions on cash holdings in companies listed in Tehran Stock Exchange. Journal of Sivilica, National Conference Accounting, Auditing and Management, 2014, 1, P.1-11. (In Persian)
[5] Arsalan, O., Florackis, C., Ozkan, A., The role of cash holdings in reducing investment cash flow sensitivity: Evidence from a financial crisis period in an emerging market. Emerging Markets Review,2006, 7(4), P.320–338.
[6] Banos-caballero, S., Garcia-Teruel, P., Martiez- Solano, P., Working capital management, corporate performance and financial constraints. Journal of Business Research, 2014, 67(3), P.332-338.
[7] Belkaui, A.R., Capital Structure-determination, Evaluation and Accounting. Westport, CT United States: Quorum Books., 1999.
[8] Brealey, R., Myers, S., Marcus, A., Fundamentals of Corporate Finance. Third Edition, United States of America: McGraw- Hill Companies, 2001.
[9] Chau, G., Leung, P., The impact of board composition and family ownership on audit committee formation: Evidence from Hong Kong. Journal of International Accounting, Auditing and Taxation, 2006, 1(15), P.1-15.
[10] Duru, A., Iyengar, Raghavan J., Zampelli, Ernest M., The dynamic relationship between CEO duality and firm performance: The moderating role of board independence. Journal of Business Research, 2016, 67, P.1-9.
[11] Fama, E.F., French, K.R., Financing decisions: Who issues stock? Journal of Financial Economics, 2005, 76, P.549-582.
[12] Forbes, D.P., Milliken, F.J., Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, 24(3), P.489-505.
[13] George, R, Kabir, R, Qian, J., Investment cash flow sensitivity and financial constraints: New evidence from Indian business group firms, Journal of Multinational Financial Management, 2011, 21(2), P.69-88.
[14] Michael, C., Jensen, W., Meckling, H., Theory of the firm: managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 1976 3(4), P.305–360.
[15] Modigliani, F., & Miller, M., Corporate income taxes and the cost of capital: A correction. The American Economic Review,1963, 53(3), P.433-443.
[16] Muchiri, M., Muturi, W., Ngumi, P., Relationship between financial structure and financial performance of Firms Listed at East Africa Securities Exchanges.Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB), 2016, 5(1), P.1734-1755.
[17] Myers, S. C., The capital structure puzzle, Journal of Finance, 1984, 39(3), P.575-592.
[18] Rahimian, N., & John Fada, R., Corporate governance system and financial constraints, sensitivity of investment to cash flow, Journal of Investment Knowledge, 2014, 3(10), P.25-46(In Persian).
[19] Ramsay, I., & Blair, M., Ownership concentration institutional investment and corporate governance, Melbourne University Law Review, 1993, 19, P.153-194.
[20] Singh, D., & Delios, A., Corporate governance, board networks and growth in domestic and international markets: Evidence from India. Journal of World Business, 2017, 52(5), P.615- 627.
[21] Sinkey, J.F., Commercial Bank Financial Management in Financial Service Indust., New York: Macmillan, 1989.
[22] Wang, Z.J., Deng, X.L., Corporate governance and financial distress: Evidence from Chinese listed companies. The Chinese Economy, 2006, 39(5), P.5-27.
