The Study of the Relationship between the Capital Structure and the Variables of the Value-based Performance Assessment

Abstract

Decision-making about the capital structure meaning company's finance, like other managers' decisions has an impact on the company's value. Therefore, determining an optimal capital structure in order to select financial sources is of crucial importance. To do so, the managers must be aware of the effects of influential variables on the capital structure. In order to assess the performance of business, different criteria have been presented, among which are the relationships of the value-based performance assessment. The present study aims at showing the correlation between the capital structure and the variables of the value-based performance assessment. The study is among descriptive researches and its methodology is ex post facto method. Also the hypotheses of the research have been tested using Spss19. Based on results, there is a negative and meaningful relationship between the capital structure and the variables of value-based performance assessment including Economic Value-Added (EVA), Market Value-Added (MVA), Cash Value-Added (CVA) in 219 companies listed in Tehran Stock Exchange within a time period of 5 years from 2007 to 2011.

Keywords: Capital Structure, Economic Value-Added (EVA), Market Value-Added (MVA), Cash Value-Added (CVA)