Assessing Firm Admission to Tehran Stock Exchange and Its Relation with the External Financing

In efficient capital markets, companies’ investment decision-makings are not related to their access to financial resources. However, in reality all capital markets are not completely efficient, and encounter many fiscal restraints, thus they have to be flexible enough to finance their projects. The present study aims to assess the effect of companies’ admission to stock market on their financial flexibility. Target population of the research is consisting of listed companies on Tehran Stock Exchange over a period from 2002 to 2011. Needed data were collected through published reports of Security and Exchange Organization, and research hypotheses were written on the basis of these data. The hypotheses were tested through the application of statistical regression method. The obtained results indicate that there is a significant difference between companies’ finance from external and internal resources before and after being listed on Tehran Stock Exchange. Having classified external finance into capital and liability, this conclusion was drawn that listed companies accept to be financed by liabilities, while they do not accept to be financed by capital appreciation. Furthermore, the achieved findings indicate that being listed on stock market does not significantly affect the relation between being financed by liabilities and capital appreciation.