The Impact of Liquidity Ratios on Leverage: Empirical Evidence from Petrochemical Companies Listed on the Tehran Stock Exchange

This study investigates the association between liquidity ratios and corporate leverage in petrochemical firms listed on the Tehran Stock Exchange. The analysis is based on panel data from ۳۲ companies over the ۲۰۱۶–۲۰۲۱ period, and the empirical model is estimated using generalized least squares (GLS) after conducting the relevant panel-data specification tests. Leverage is considered the dependent variable, while the current ratio, quick ratio, liquidity ratio, cash turnover ratio, and net working capital ratio are employed as explanatory variables. The empirical findings reveal that the current ratio, quick ratio, and liquidity ratio exert positive and statistically significant effects on leverage. These results suggest that firms with stronger short-term liquidity positions tend to rely more heavily on debt financing, possibly because greater liquidity enhances creditors’ confidence and reduces financing constraints. By contrast, cash turnover ratio and net working capital do not show a statistically significant relationship with leverage, indicating that not all liquidity indicators are equally relevant in explaining capital structure decisions. Overall, the study contributes to the capital structure literature by providing evidence from an emerging market and by highlighting the differentiated role of liquidity measures in shaping financing choices. The findings offer practical implications for corporate managers, investors, and creditors in evaluating how liquidity management may influence leverage decisions within capital-intensive industries such as petrochemicals.

کلیدواژه ها:

Liquidity Ratios ، Leverage ، Capital Structure ، Petrochemical Industry ، Tehran Stock Exchange ، Panel Data ، GLS