The impact of financial leverage on investment decisions in Tehran Stock Exchange (Iranian evidence) Ola Mohammadrezea, Kakhki Mojtaba Sane'eeb aDepartment of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran bMaster Student of Accounting, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran Online published on 15 April, 2014. Abstract This study examines the relationship between financial leverage and investment decisions and role of growth opportunities in this field. 97 companies from the companies listed in Tehran Stock Exchange during the 10 year period between 2003 to 2012 were reviewed. Two measures of financial leverage is defined. The relationship between the second financial leverage ratio (long term debt to assets) and investment was positive and significant. In this regard, the relationship between the First financial leverage ratio (debt to assets ratio) and investment were negative and significant. In the second hypothesis, the growth opportunities are also added to the basic model to investigate the role of growth opportunities on the relationship between financial leverage and investment. The results show a stronger negative relationship between the first financial leverage ratio and investment in firms with fewer growth opportunities than firms with more growth opportunities. These results provide support to agency theories of corporate leverage, and especially the theory that leverage has a disciplining role for firms with low growth opportunities. Top Keywords Investment decisions, financial leverage, growth opportunities, panel data analysis. Top |