Review relationship degree of financial leverage as symbols of accounting information with risk

Abstract

Precise decision-making is inevitable by individuals, companies, government, etc for proper distribution and efficiency of financial resources. To make such decisions, decision-makers must have reliable information. In fact, the goal of accounting is to help these decision-makers. On the other hand, investment is essential in growth process and economical development of country. In this study, a number of accounting variables such as accounting profit, degree of financial leverage were selected as symbols of accounting information. Then their relation with systematic risk of those companies accepted in Tehran Stock Exchange was investigated. In this research, a sample including 98 companies accepted in Tehran Stock Exchange were selected during a 6 years period (2006-2012). Regarding to nature and method, this is correlation research,In order to test the assumptions, linear regression was used and in order to test correlation of variables, p-value test was used. The results showed that there is a direct relation between degree of financial leverage with systematic risk by 90% confident level.