Paper Information

Journal:   JOURNAL OF ASSET MANAGEMENT AND FINANCING   FALL 2015 , Volume 3 , Number 3 (10) #B0065; Page(s) 83 To 103.
 
Paper: 

SIMULATING THE EFFECT OF FINANCIAL LEVERAGE MODEL ON COMPANY VALUE VIA SYSTEM DYNAMICS APPROACH (CASE STUDY: NATIONAL IRANIAN COPPER INDUSTRIES COMPANY)

 
 
Author(s):  MOUSAVI HAGHIGHI M.H., KHALIFEH M.
 
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Abstract: 

Financing of companies investments are usually done by some various financing tools that each of them have their own specifications. In Iran, most of these tools are limited to loans and common stocks. This study considers and simulates the role of financial leverage on intrinsic value and stock price of national Iranian copper industries company via heuristic approach and by using system dynamics method and the relations of financial and capital market data. Research systemic model has been simulated and analyzed by this approach and applying Vensim DSS software. The overall results shows, increase of financial leverage has little role on company value however increase of equity has an influential role on the decrease of stock expected return rate and increase of company value; so that at the end of study horizon capital cost rate decrease till seven percent and at the late of the period the stock price will experience close to eight thousand rial.

 
Keyword(s): SYSTEM DYNAMICS, CAPITAL STRUCTURE, FINANCIAL LEVERAGE, INTRINSIC COMPANY VALUE, CAPITAL MARKET
 
References: 
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