THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE AND THE LIFE CYCLE LISTED IN TEHRAN STOCK EXCHANGE

Abstract

Knowing the stage where the company is located, This will allow the users of accounting information to better evaluate the financial information, Current and future needs (such as investment and financing) and also to provide management capabilities. For this purpose, which is company in any stage of the life cycle, the life cycle of separation Anthony and Ramesh (1992) and Blake (1998) variables using sales growth, capital expenditure, dividends and age ratios used 's. Study period from 2006 to 2011 is considered. In the present study a sample of 156 companies (936 years - the company) of the study population are listed companies in Tehran Stock Exchange has been selected. The separation of the corporate life cycle, 196 (year - company) Growth, 495 (year - company) mature and 245 (year - Company) is declining. In this study, the pecking order theory is used for investigate the capital structure. This theory is based on asymmetric information between investors and firm managers. Based on the peciking order theory, the first priority for the use of internal funds (retained earnings), then the release of low-risk debt, and finally equity, the position of the last priority. The results of the hypothesis test showed that growth firms are following the pecking order theory in their capital structure model, While mature and declined firms in their capital structure model does not follow from the pecking order theory.