Effects of Financial Distress, Dividend Policy and Debt-to-Equity Ratio on Firm Value

Document Type : Original Article

Authors

1 Assistant Professor of Islamic Azad University, Tehran South Branch

2 PhD student, Department of Accounting, Faculty of Economics and Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran

Abstract

The positive or negative reaction of the market to the profit sharing policies of economic units and the intensity of such reaction depends on the level of financial restrictions. The purpose of this research is to investigate the effects of financial distress, dividend policy and debt-to-equity ratio (debt-to-equity) on firm value. Research in terms of purpose is part of applied research and research method in terms of nature and content is cause and effect. The research was conducted in the framework of deductive-inductive reasoning and panel analysis was used to analyze the hypotheses. The statistical population of the research was all the companies admitted to the Tehran Stock Exchange and using the systematic elimination sampling method, 168 companies were selected as the research sample in The 8-year period between 2013 and 2021 was investigated. The results of the research hypotheses test showed that although financial Distress leads to a decrease in the change in the direction of the relationship between dividend policy and company value; But this effect is not significant; Also, the results showed that debt to equity ratio has a negative and significant effect on the relationship between dividend policy and company value.

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