Analysis of the Relationship Between Capital Structure and the Market Value of the Shares Applied Study in the Iraqi Market for Securities

Abstract

Businesses are facing major domestic and global challenges that reflect their impact on these companies by influencing their financial decisions. Accordingly, business behavior differs in choosing the financing method that will have a clear impact on their performance. This study is considered as a contribution to examine the impact of the financial decisions of the company's management on the structure of the capital structure by studying the relationship between changing the structure of capital and the market value of shares. The decision to finance the company is one of the most important financial decisions for companies. Contribution, since the concept of capital structure and its practical implications is very important for managers regardless of the area in which they work. The capital structure formula is the outcome of the interrelationship between the tax benefits that the entity obtains as a result of high debt volume and bankruptcy risk, which favors the use of financing by issuing shares and their impact on the profitability of the company. The analysis of this relationship on a sample consists of (15) companies of the industrial sector listed in the Iraqi market for securities. Using statistical analysis to determine the correlation coefficient (R) to identify the type and degree of relationship between the two variables (capital structure) of the independent variable and the dependent variable (market value).The research concluded with a set of conclusions and recommendations. There are many factors effect of political, economic, securities conditions on the relation between capital structure and market value of stocks .