The Impact of business risk on the firms speed of capital structure adjustment

Document Type : Original Article

Authors
Jafar Abbasi okhchi 1
nader rezaei 2
asgar pakmaram 3
ahmad mohammadi 4
1 Ph.D. Student of Accounting, Bonab Islamic Azad University
2 Assistant Professor, Department of Accounting, Bonab Islamic Azad University
3 Associate Prof., Faculty of Literature and Humanities, Islamic Azad University Bonab Branch, Bonab, Iran.
4 Assistant Prof., Faculty of Literature and Humanities, Islamic Azad University Tabriz Branch, Tabriz, Iran.
10.30495/jik.2025.23606
Abstract
Several factors influence capital structure decisions. One of the main factors is business risk or the amount of risk related to assets if debt is not used. The higher the company's business risk, the lower its optimal debt ratio. The main purpose of this empirical research is to determine the effect of business risk on the speed of adjustment of capital structure. The statistical sample of the research includes 150 companies that have been selected from the companies listed on the Tehran Stock Exchange for the period 2008-2019. The results of testing the hypotheses showed that business risk has a significant effect on deviation from the target lever, the relative stability model of the target lever and the partially modified target lever model. This means that controlling business risk will affect the speed of adjustment of the capital structure.
Keywords
Business risk
capital structure
speed of capital structure adjustment
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