M.A. Thesis:

Target Leverage and Life Cycle

The optimal capital structure is linked to the trade- off theory; because it assumes that the leverage of a firm's target is influenced by competitive forces. The main objective of the paper is to study the relationship between corporate life cycle and financial leverage based on evidence of the capital market. In this paper, however, three stages have been used in the lifecycle, namely emergence, growth and maturity. In this applied paper, a post-event descriptive-correlational approach (based on past and historical data) has been used using financial statements of firms in Tehran Stock Exchange (Statistical Society). Hypotheses testing were carried out by multivariate regression during 2010-2016 (seven years). The data were also collected through a screening method and the hypotheses were analyzed using R statistical software. At the expected error level (%5), the results of the analysis implied that: There is a meaningful relationship between the introductory or emerging phase and the lifecycle and financial leverage. There is no meaningful relationship between the growth cycle during the life cycle and the financial leverage. There is also no meaningful relationship between the maturity period during the life cycle and the financial leverage. Based on the results, it can be seen that companies are introduced at a faster rate than the target leakage during the (birth) stage of the growth or puberty period. The results of the first hypothesis of the study were consistent with the results of Castro et al. (2016) and in other hypotheses, they were not consistent with the results of these researchers.

Keywords: Life Cycle, Capital Structure, Financial Leverage.