Investigating the profitability of the stock market and the financial efficiency of companies with capital projects, including the interactive role of the financing method

Document Type : Original Article

Authors

Ali Talib Ahmed Aljhayyish ¹

Mohammad Javad Saei

Mohammad Ali Bagherpour Velashani ²

¹ Ferdowsi University of Mashhad

² Department of Economics and Administrative Sciences, Ferdowsi University of Mashhad

https://doi.org/10.22067/mfe.2025.91415.1487

Abstract

The development of companies leads to the creation of wealth only when there is a rational cost-benefit relationship between the cost of capital and the efficiency of the projects. The cost of capital is influenced by the method of financing, and its yield is reflected in the accounting profit and finally in the stock yield. This research has investigated this issue using the differential method and on 182 companies admitted to the Tehran Stock Exchange in the years 2016 to 2016. The role of the financing method on the profitability of the stock market and the financial efficiency of companies with capital projects has also been investigated. The results show that in emerging economies like Iran, the performance of financial efficiency and the profitability of the stock market of companies with capital projects are not affected by their financing methods. Also, the performance trend of financial efficiency and profitability of the stock market in this research sample follows similar patterns. These findings provide new evidence regarding competing theories of corporate financing.

Keywords

financial performance efficiency

stock market returns

financing

capital structure

Subjects

• financial markets

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