Capital Structure in Iran: Case of Chemicals and Petrochemicals Products, Rubber and Plastic Products, Refined Petroleum and Nuclear Fuel Sectors

Abstract

The purpose of this study is to identify and examine the financial sources for Iranian corporations and the capital structure in Iran particularly for Chemicals and Petrochemicals products, Rubber and Plastic products, Refined Petroleum and Nuclear Fuel sectors. The second aim is to find out the strength and weaknesses of managerial policies in Iran and the problems involved in the capital market of Iran. Finally, the comparison between the capital structure in Iran and Turkey is examined in this study. Both quantitative and qualitative methods were applied in this thesis and it was aimed to find the methods of financing in Iran from the financial statements of chosen companies listed in Tehran stock Exchange. This survey focused on the time period from 2004 to 2008. The results of this study showed that Iranian corporations use more debt in their financial strategies, even though they do not issue bonds. It was found that Tehran Stock Exchange is not an efficient market for companies to raise capital due to the unavailability of proper regulations and broad government ownership. The results indicated that selected companies in Iran rely more than 80% on short-term financing. The revealed results are consistent for Turkish companies as well.