This paper investigates the role of the hierarchical theory in explaining the capital structure of the firms based on enterprise life cycle model on selected firms listed on Tehran Stock Exchange (TSE) using three methods of net equities, net liabilities and retained earnings. | The role of the hierarchical theory in explaining the capital structure of the firms based on enterprise life cycle model Accounting 3 2017 47 52 Contents lists available at GrowingScience Accounting homepage ac The role of the hierarchical theory in explaining the capital structure of the firms based on enterprise life cycle model Jamal Bahiri Saletha and Abbas Aalizadehb a Assistant Professor Accounting Group Oroumieh Branch Islamic Azad University Oroumieh Iran b PhD Student Assistant Professor Accounting Group Oroumieh Branch Islamic Azad University Oroumieh Iran CHRONICLE ABSTRACT Article history Capital structure is a controversial issue in the field of corporate finance. There are several Received December 5 2015 studies to find a way to determine the optimal capital structure to minimize the cost of capital Received in revised format and maximize the corporate value. In fact capital structure is a combination of firms liabilities February 16 2016 and capital to meet long term assets. This paper investigates the role of the hierarchical theory Accepted May 24 2016 Available online in explaining the capital structure of the firms based on enterprise life cycle model on selected May 25 2016 firms listed on Tehran Stock Exchange TSE using three methods of net equities net liabilities Keywords and retained earnings. The study uses Park and Chen s 2006 method Park Y. amp Chen K. Tehran Stock Exchange H. 2006 . The effect of accounting conservatism and life-cycle stages on firm The hierarchical theory valuation. Journal of Applied Business Research JABR 22 3 75-92. to categorize the life Growth cycle of 81 randomly selected firms from TSE over the period 2007-2012. The results indicate Life cycle that the hierarchical theory represents the growing firms better than the matured firms do. The results also show that firms were more willing to reduce their dividend per share for financing their projects. 2017 Growing Science Ltd. All .
