Document Type : Research Paper

Authors

Abstract

Most of the financial managers believe that financial leverage is one of the most important leverage concepts. This concept has a key position in capital structure. Management capital structure of a firm is a combination of debt and equity holders. A firm which has not any debt is a firm without debt in structure. As capital structure in more firms is consist of debt and equity holders, financial managers are very sensitive and minute about loan delivery and its effects. But there is a question that how much debt should a firm use? Is there any marked criterion for debt measure in the firm capital structure?
In most countries which have efficient capital market, leverage ratios provide for different conditions and industries, so the firms in determination of capital structure, investors in securities and banks and financial institutions when investment and giving loan to a firm consider these standards. But there aren’t any standards in our country. This research analysis the relationship between the firms’ financial leverage and the industry type, the firm's size, business risk and operation leverage and their relationship. We search for some information for the financial managers use to make the best  financial decision. On the other hand, one of the conditions of liberty investment market is giving correct, clear and subtle information to the whole people. In this market, the   security   price   indicates   al I   information   about those   securities.  In Tehran stock exchange, using this information is not common for investors to use it as a criterion to measure a firm financial risk and desirability of dividend. If  one  may  determine  the  relationship  of  four above factors with the firm  financial  leverage, not only we can use of this information  in  stock  market, but  also  in  determination  of  validity  of  a firm  for banks. In this research, we considered the financial information which is related to 88 firms i n two periods.  After the information analysis  using  different  statistical  methods,  it  was  distinguished  that  the hypothesis  of direct relationship  between  financial  leverage and  financial measure, is confirmed  only  in some of the  industries, but the other three hypotheses in two period are rejected.

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