Abstract:
The purpose of this study was to determine the effect of financial distress on in-vestment behavior for the years of 2011 to 2016. The statistical population of the research is Tehran Stock Exchange. According to the systematic elimination method, 104 companies have been selected as the statistical sample. In this research, financial distress is independent variable and corporate investment behavior is dependent variable and investment opportunities is considered as interactive variable. The present research is an applied research and in terms of methodology is a correlational study. In this research, for collecting data and information, library method and in the research data section, financial statements, explanatory notes and monthly magazine of stock exchange, and in order to de-scribe and print the data collected, descriptive and inferential statistics and to analyze the data, pre-test variance analysis, F-limmer test, Hausman test and Jarck-Bera test, and then multivariate regression test for confirmation and rejec-tion of research hypotheses (EViews software) were used. The results showed that firms with less investment opportunities tend to be less likely to invest, in addition distressed financially firms with more investment opportunities are more likely to increase investment.
Machine summary:
The Effect of Financial Distress on the Investment Behaviour of Companies Listed on Tehran Stock Exchange Roya Ahmadia, Hamidreza Kordloei*, b a Department of Financial Management, Faculty of Management and economics, Islamic Azad University, Science and Research Branch of Tehran,Iran b Department of Financial Management, Faculty of Management, Islamic Azad University, Islamshahr Branch, Tehran ,Iran ARTICLE INFO Article history: Received 10 May 2018 Accepted 20 November 2018 Keywords: investment behavior financial distress investment opportunity.
Davydenko and Franks [6] and Qian and Strahan[23] have shown that the characteristics of bankruptcy laws are considered to be the determining factor of financial behavior and that the direction of bankruptcy laws may lead to inefficiencies in investment decisions [6,23].
According to the theoretical foundations, the second hypothesis of the research can be formulated as follows: Hypothesis 2: Financially distressed companies with more investment opportunities are more likely to increase investment.
Evidence from the experimental results of a research showed that the behavioral variables studied, have significant and inverse effect on the stock return of the companies [12].
According to the first hypothesis, it is recommended that investors before investing in a stock of a company use a fitted model in this research, recognize the effects of invest- ment opportunities on financial ratios of companies and take into account the results in their deci- sions.
Also, according to the results of the second hypothesis study; financially distressed companies with more investment opportunities tend to increase investment.