Effect of Complex Ownership Structure and Ownership Control Ratio on Financial Leverage in Companies Listed on Tehran Stock Exchange

Abstract

The aim of the present study is to examine the effect of complex ownership structure and ownership control ratio on financial leverage of companies listed on Tehran Stock Exchange. Statistical research population of the present study is consisted of all the companies listed on Tehran Stock Exchange during the timeframe of 2006 - 2011 and sample volume was determined by using screening method which is equal to 110 companies after the elimination of outlaying observations (660 year-firm). In this study, the variables of ratio of institutional investor ownership, ratio of managerial ownership, ratio of non-managerial ownership and ratio of ownership control were considered as independent variables to study their effect on the dependent variable of financial leverage in companies. In this study, in which panel data with fixed effects were used, results obtained from analyzing 110 firms (660 year-firm) during the timeframe of 2006 - 2011 by using multivariate regression at 95% confidence level indicated that the variables of ratio of institutional investor ownership and ratio of managerial ownership have positive (direct) effect on financial leverage in companies. Also, it was indicated that the variables of ratio of non-managerial ownership and ratio of ownership control don't have any effect on financial leverage in companies.