Relationship between Stock Over-Valuation and Corporate Debt Costs with Considering the Moderator Variable of Information Asymmetry

Document Type : Research Paper

Authors

Payame Noor University Tehran West, Tehran, Iran

Abstract

Companies need to attract funds to finance their projects that can finance through borrowing, loan, or issue of Musharekat. Companies create debts to attract the capital that lenders or loan providers should trust the company and be sure of their refund. This would motivates managers to price their stock more than real value. Since creditors oversee borrower's companies, they can detect over-valuation and increase the interest for over-valued companies. According to what has been said, the purpose of this study is to investigate the relationship between over-valuation and debt cost in Listed Companies in Tehran Stock Exchange. Statistical population of this research included 92 companies Listed in Tehran Stock Exchange for the period 1391-1396 are surveyed. In order to find answers to research questions, combined data method is used. Also for data analysis and extracting of research results, multivariate regression model was used. The results of testing the research hypotheses show that over-valuation, increases the cost of corporate debt but information asymmetry does not exacerbate this relationship.

Keywords


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