M.A. Thesis:

The effect of profit smoothing and financial flexibility on capital structure

Capital structure has always been one of the most important decision making issues in the company, which has several factors influencing it. In this research, we tried to examine the effect of two important factors of profit smoothing and financial flexibility on the structure of corporate capital. For this purpose, the information of 144 companies accepted in Tehran Stock Exchange during the period of 2011-2012 was used as a research sample. Also, the profit smoothing provided by Tucker and Zarrowin (2006) and the two criteria provided by Marcica and Mora (2010) were used as financial flexibility. The company's capital structure was also considered a financial leverage. The results showed that in the level of error of 5%, profit smoothing negatively affects corporate capital structure. This means that increasing the smoothing of the fuel will reduce the financial leverage of the company, while financial flexibility has a positive and significant effect on the capital structure of the companies. And this means that increasing financial flexibility will increase the financial leverage

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