The relationship between the capital cost and book value of assets and its net profit growth in companies listed in Tehran Stock Exchange

Authors

  • S. Salajeghe Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran, Islamic Republic of
  • M. R. Kheirandish Department of Accounting, college of Human Sciences, Ramhormoz Branch, Islamic Azad University, Ramhormoz, Iran. Iran, Islamic Republic of
  • V. Khademi Department of Accounting, Baghmalek Branch, Islamic Azad University, Baghmalk, Iran, Islamic Republic of
  • F. gheisari Department of Management, Ramhormoz Branch, Islamic Azad University, Ramhormoz, Iran, Islamic Republic of

Keywords:

cost of capital, capital structure, growth in net income, Book value of assets

Abstract

The purpose of this study is to investigate the effects of two factors: book value of assets and net profit growth on the capital cost of listed companies in Tehran Stock Exchange. Therefore, the companies’ book value of assets was considered as a measure of the size and the geometric mean of net income growth in sample companies was used to assess the relationship between net profit and capital expenditures. 50 companies were selected randomly among 4 industries. The study period was from 2005 to 2011 and the research methods used in the study are library study and using historical data that were extracted from Tadbirpardaz software. Two hypotheses were tested in this study include: 1. the company's cost of capital and the book value of its assets are related. 2 - The company's cost of capital and the net profit growth are related. To test these hypotheses, the data of independent variables were collected from various sources and were classified, then the capital cost of the sample companies were calculated using the pattern of capital assets pricing model (CAPM). Using factor analysis, correlation coefficient and linear regression the relationship between the independent variables (book value of assets and net profit growth) and the dependent variable (cost of capital) has been studied. The results show a significant direct and positive relationship between the independent variable capital costs of research.

References

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Published

2014-04-28

How to Cite

Salajeghe, S. ., R. Kheirandish, M. ., Khademi, V. ., & gheisari, F. . (2014). The relationship between the capital cost and book value of assets and its net profit growth in companies listed in Tehran Stock Exchange. Scientific Journal of Review, 3(4), 224-233. Retrieved from http://sjournals.com/index.php/sjr/article/view/593

Issue

Vol. 3 No. 4 (2014): April

Section

Management Science/Operations

License

Copyright (c) 2020 S. Salajeghe, M. R. Kheirandish, V. Khademi, F. gheisari

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.