The study of relationship between capital intensity and financial leverage with degree of financial distress in companies listed in Tehran Stock Exchange
Journal Title: International Research Journal of Applied and Basic Sciences - Year 2013, Vol 4, Issue 12
Abstract
Many companies are faced with financial distress and bankruptcy, during the global financial crisis in recent years. A firm’s financial leverage has been recognized as one of the main factors that explain a firm’s financial distress.The second main factor is capital intensity, measured by total fixed assets scaled by total assets. The purpose of this research is to study is the relationship between capital intensity and financial leverage with degree of financial distress. Statistics society are included the companies listed in Tehran Stock Exchange during the period 2007-2011.After sampling in deleting systematic 32 companies as 160 years-companies are selected. Degree of financial distress was measured by modified Altman’s Z-Score. The analysis of data in both side of descriptive statistics and inferential by Eview6 system is done. The findings suggest a negative significant relationship between financial leverage and degree of financial distress (modified Altman’s Z-Score). There is a negative significant relationship between capital intensity and degree of financial distress and the results showed that between capital intensity and financial leverage with degree of financial distress (modified Altman’s Z-Score) of the companies listed in Tehran Stock Exchange is not significant relationship.
Authors and Affiliations
Mohammad Reza Pourali| Assistant Professor of Accounting, Department of Accounting, Faculty of Management and Accounting, Chaloos Branch, Islamic Azad University, Chaloos, Iran., Mahmoud Samadi| Assistant Professor of Accounting, Department of Accounting, Tonkabon Branch, Islamic Azad University, Tonkabon, Iran, EnsiehKarkani*| M.A. Student of Accounting , Department of Accounting, Science and Research Branch, Islamic Azad University, Guilan, Iran. Ensieh.karkani@yahoo.com
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