Authors : Reza Fallah, Mehdi Mardani and Reza Golestani
Abstract: In this research, the effect of adoption of off-balance sheet financing on the factors affecting investors’ reactionof the firms accepted into Tehran’s Stock Exchangeis studied. Previous studies have shown that firms make use of off-balance sheet financing tools when on the one hand while acquiring assets don’t show the related assets and debts in financial statements and on the other hand show the financial leverage and profitability ratios of the firm favorably. On the other hand, the activity of off-balance sheet financing provides more tax saving than lack of use of this type of financing. Generally, the benefits acquired by a firm, as a result of off-balance sheet financing is more than its imposed risk. For this purpose, factors affecting investors’ reaction using off-balance sheet financing are tested in the present study. The existing research is a descriptive-inferential one. Descriptive statistics have been used to describe the population and the studied sample and inferential statistics have been used to analyze the data related to the hypotheses of the study. The statistical population has been determined out of 37 industries distributed among the exchange as 116 firms that include all the firms existing in eight major industries of stock exchange (car and car parts, petrochemical, oil products, cement, drugs, household and sugar appliances) during the time domain 1389-1393. Using Cochran sampling, 89 firms were selected as the study sample. The results of the study indicate that given future expectations of investors, the effect of adoption or the lack of adoption of off-balance sheet financing in firms on factors affecting investors’ reactionhas no meaningful difference in Iran capital market.
Reza Fallah, Mehdi Mardani and Reza Golestani, 2016. Study of the Effect of Adoption of Off-Balance Sheet Financing on the Factors Affecting Investors’ Reaction of the Firms Accepted into Tehran’s Stock Exchange. International Business Management, 10: 2955-2966.