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Various Financing Resources and Future Abnormal Stock Returns

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Author Affiliations

  • 1Accounting Department, Allame Amini High Educational Institude of Bahnamir, Babolsar, Mazandaran, IRAN
  • 2Accounting Department, Rahedanesh High Educational Institude of Babol, Mazandaran, IRAN

Res. J. Recent Sci., Volume 3, Issue (4), Pages 84-87, April,2 (2014)

Abstract

The main goal of this paper is to investigate the relationship between various financing methods and the way of using proceeds provided from these methods with abnormal returns of 172 listed firms in Tehran Stock Exchange During a five year period. The firms can provide their fiscal sources by two ways of internal and external sources. Because the expenses of internal financing sources are different from external financing sources and this point, itself, affects the stock's return. Consequently the problem of the manner of firm's financing is very important for investors and especially for stock holders. Of course, only providing of fiscal sources as a bridge for next responsibility and may be more important i.e optimal allocation of these sources and funds to the investing designs is justifiable. This research is an empirical study, which investigates the relation between accounting and financial variables by using Spearman’s correlation coefficient. The results of this research show that net change in total financing and its components (i.e. internal financing and external financing) have no significantly negative relation with abnormal returns. However, there is significantly positive relation between internal financing and Abnormal Returns. Also, there is significantly negative relation between change in externally financed net operating assets and Abnormal Returns. Finally, there is no significantly negative relation between change in internally financed net operating assets and abnormal returns.

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