The Effect of Institutional Investors on Capital Structure in Industry-Leading Firms, with Emphasis on Initial Public Offerings (IPOs)

Authors

  • Fatemeh Kamkar Yazdnezhad * Department of Accounting, Imam Reza International University, Mashhad, Iran.
  • Seyyed Hesam Vaghfi Department of Accounting, Payame Noor University, Tehran, Iran.

https://doi.org/10.22105/tqfb.v3i2.89

Abstract

The purpose of this study is to examine the effect of institutional investors on capital structure and the moderating role of Initial Public Offerings (IPOs). To this end, three research hypotheses were developed and tested using data from 336 firm-year observations pertaining to companies listed on the Tehran Stock Exchange (TSE) over the period 2018–2024. The main research variables include institutional investors, capital structure, and IPOs as the moderating variable. To analyze the data and test the hypotheses, panel-data-based statistical and econometric methods were employed using Stata version 17 at a 95% confidence level. The results of the hypothesis tests indicate that institutional investors have a positive and statistically significant effect on firms’ capital structure. Furthermore, the findings show that, among industry-leading firms, institutional investors have a positive and significant effect on capital structure. In addition, the results indicate that under IPO conditions, the moderating effect on the aforementioned relationships remains positive and statistically significant. Overall, the findings suggest that the active participation of institutional investors, particularly in the context of IPOs, can play an important role in improving firms’ financing decisions and enhancing investment efficiency. Based on the findings, it is recommended that corporate managers strengthen the role of institutional investors and pay particular attention to firms’ financial conditions to facilitate improvements in capital structure and the optimal allocation of resources. Future studies are also encouraged to examine other governance and institutional factors affecting capital structure and investment efficiency across different industries and time periods.     

Keywords:

Institutional investors, Capital structure, Initial public offering, Industry-leading firms

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Published

2026-06-24

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Vol. 3 No. 2 (2026): Transactions on Quantitative Finance and Beyond

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How to Cite

Kamkar Yazdnezhad, F., & Vaghfi, S. H. (2026). The Effect of Institutional Investors on Capital Structure in Industry-Leading Firms, with Emphasis on Initial Public Offerings (IPOs). Transactions on Quantitative Finance and Beyond, 3(2), 181-197. https://doi.org/10.22105/tqfb.v3i2.89
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