Dynamic Simultaneous Modeling for Corporate Financial Decisions Behavior Under Uncertainty in Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Associate Professor University of Tehran, Iran

2 Assistant Professor University of Tehran, Iran

3 Financial Management PhD student, Kish International Campus University of Tehran Faculty Member Payam Noor University, Iran

Abstract

In this study, a dynamic simultaneous modeling for financial behavior for Tehran Stock
Exchange listed companies has been constructed. Four structural equation including
investment, debt, dividend and equity issue are estimated by a system generalized method of
moment method. Results indicate that simultaneity in investment, debt, dividend and equity
issue decisions exists. Companies’ management facing with constraint in financing should
consider sources and using choices together in order to preventing losses from un-optimal
investment and increases in cost of capital. Pecking order theory in investing by companies
confirmed. We argue that static models of financial decisions produce inconsistent coefficient
estimates, and that models that do not acknowledge the interdependence among decision
variables produce inefficient estimates and provide an incomplete and potentially misleading
view of financial behavior.

Keywords

Main Subjects

References

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