Investigation of the Relationship between Capital Structure and the Return on Assets with an Emphasis on the Moderating Role of Market Structure of the Products of the Listed Companies in Tehran Stock Exchange

SUMMARY The present research aims to answer the following question: Can the effect of capital structure on the return on assets be changed by the market structure of the product? In other words, is the change in product market competition able to change the strength of the effect of capital structure on the return on assets? Therefore, 65 listed companied in Tehran Stock Exchange were selected in the period between 2006 and 2012. Panel data regression model and Chu and Hausman Test were applied in order to test the hypotheses. Results indicate that capital structure has a negative and significant effect on the return on assets. Moreover, it was indicated that the product market structure moderates the relationship between capital structure and the return on assets.