Study on the Role of Financial Constraints on the Changes in the Policies of Corporates Listed in Tehran Stock Exchange

Abstract

The  financial  restrictions  refer  to  those  restrictions  that  prevent  providing  all  the  funds  needed  for
desired investment. Determination of the exact cause or causes of the financial constraints and financial problems
in  any  particular  case  is  not  easy.  In  most  cases,  several  reasons  together  lead  to  the  financial  constraints
phenomenon. Changes in corporates’ policies refer to the determination of objectives and the amount of potential
wealth to invest as well as the identification of potential kinds of financial assets, in order to put in the reference
portfolio. The main objective of this study is to examine the role of financial constraints on corporates’ policies
change. In the present study, WW has been used to measure the financial constraints. For this purpose, a sample of
100 corporates listed in Tehran Stock Exchange for the 5-year period 2008 to 2012 has been investigated. To verify
the hypotheses, the multiple regression method has been used. The results of hypotheses testing show that there is
no  significant  difference  between  the  presence  and  absence  of  a  relationship  between  financial  constraints  and
liquidity management, as well as capital structure and financing policies. However, there is a significant difference
between existence and non-existence of financial constraints and policies of corporates investment.
Keywords: Financial constraints, Liquidity management, Capital structure, Financing.