Elucidating the Mechanism Through Which Debt Financing and the Book Value of Equity Affect Firm Value, with Emphasis on the Mediating Role of Capital Structure and Macroeconomic Factors among Companies Listed on the Tehran Stock Exchange

Farshad Nemati; Mahmoud Hemat Far

Authors

Farshad Nemati Department of Accounting, Bo.C., Islamic Azad University, Borujerd, Iran Author https://orcid.org/0009-0005-1996-6248
Mahmoud Hemat Far Department of Accounting, Bo.C., Islamic Azad University, Borujerd, Iran https://orcid.org/0000-0002-3976-9322

Keywords:

debt financing, book value of equity, firm value, capital structure, macroeconomic factors

Abstract

The purpose of the present study is to elucidate the mechanism through which debt financing and the book value of equity affect firm value, with emphasis on the mediating role of capital structure and macroeconomic factors among companies listed on the Tehran Stock Exchange. In terms of research design, this study is descriptive-correlational, and in terms of purpose, it is applied research. A library research method was used to collect the required information and data. To test the research hypotheses, correlations among the study variables were first examined, and where correlations existed among the variables, regression models were subsequently estimated. The statistical population consisted of all companies listed on the Tehran Stock Exchange. Using a systematic elimination (screening) method, 146 companies were selected over the five-year period corresponding to the 2021/2022–2025/2026 fiscal years. The final analyses were conducted using EViews software. Data analysis was performed using both descriptive and inferential statistics. The results indicate that board size, agency costs, the price-to-book ratio, and market capitalization have positive and significant effects on Tobin’s Q, whereas debt has a negative and significant effect on Tobin’s Q. Furthermore, an inverted U-shaped relationship was identified between market capitalization and firm performance when interacted with domestic credit provided by the financial sector.

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