EVALUATION OF LIFECYCLE AND CAPITAL STRUCTURE OF LISTED AUTOMOTIVE INDUSTRY IN TEHRAN STOCK EXCHANGE

Abstract

The main objective of this research is to study relationship between lifecycle and capital structure of the listed automotive companies in Tehran Stock Exchange. The lifecycle of various industries are different, so that information related to all automotive industry companies from 2001-2010 have been studied and in general17 companies have been selected as sample. In this research, after separation of the companies their lifecycle levels have been evaluated including growth level, maturity level and decline level using
Antoni Ramesh method and variables of the company age, sales growth, return on assets (ROA), capital expenditures and dividend payout ratio, two theories of static balance and hierarchical which are regarded as the main hypotheses of the capital structure along with a hybrid model. Data model of this type has been (sectional-time) and it was conducted by evaluating 170 years of the company. To select the estimation method, the regression model (Panel Data or pooled data from Chow test has been utilized. The results show that the capital structure of the automotive industry follows theory assumptions of the static balance through the lifecycle of the automotive industry and by separation of its levels and in order to estimate its model, the pooled data should be used instead of Panel Data.