the Effect of Macroeconomic Variables on Management Financing Decision

Abstract

In this study we evaluate the effects of macroeconomic factors on managements financing decision. Inflation rate, exchange rate, economic growth, interest rate and the amount of bank credits are considered as proxies of macroeconomic factors, furthermore the ratio of debt to equity is appointed as the proxy of managements financing decision. We gather the required data from published information by listed companies in Tehran stock exchange during the period of 1375 to 1390. In order to analyze the data we apply multiple variableregressions based on panel data. Our results show that inflation rate, economic growth rate and interest rate have significant negative relation with managements financing decision. In contrast, our findings show that exchange rate and amount of bank credits have no significant relation with managements financing decision.

Keywords

• managements financing decision
• macroeconomic factors
• inflation rate
• economic growth rate
• interest rate
• exchange rate
• bank credits. ∗