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Imposing sanctions can have several malicious effects on a developed or developing economy and Iran is not an exception to this matter. The main purpose of this paper is to determine whether imposing oil sanctions have a significant impact on oil, gas and petroleum companies’ capital structure or not. Furthermore, a comparison between oil industry and cement industry and a prediction of oil companies’ capital structure trend are conducted. The most innovative aspect of our study is to evaluate the influence of sanctions on a firm-specific variable rather than macroeconomic level. To address this problem, we investigate oil and cement companies listed in Tehran Stock Exchange from 2006 to 2018. The leverage ratio indicating capital structure, sanction dummy variable and ROA, tangibility of assets, capital market return, economic growth and inflation rate are dependent variable, independent variable and control variables, respectively. The data are obtained from companies’ financial statements and we use OLS regression to estimate our equations. The results indicate that the 2012 oil sanctions against Iran affect the oil companies’ leverage ratio negatively and the future trend reveals that the share of equity in capital structure will increase. Moreover, we inspect no significant relationship between oil sanctions and cement companies’ capital structure. Therefore, government policymakers should plan strategies to lift or limit the oil sanctions and oil corporate managers should find some reasonable routes for balancing their companies’ capital structure to exploit debt financing benefits.

A comparative study of the impact of sanctions on the oil and cement companies listed in Tehran Stock Exchange: Forecasting and Future Trends