Investigation of Relationship between Balance sheet Financing and Market value to Book value ratio: Evidence from Iran

Favorite performance of an activity encourages financial suppliers to apply their resources in that activity. Because favorite performance, increase of companies value and as a result wealth of resources owners. Also one of the main areas of decision making of managers for increasing shareholders wealth and developing activities is financing decisions. Present research investigates the relationship between balance sheet financing and market value to book value per share ratio (M/B). In addition to financial statements information, M/B ratio uses market information and values and this causes more relevant data to be investigated. The results of the research show that there is a direct and meaningful relation between balance sheet financing and M/B ratio in the year after financing as well as several years after financing (three years after financing).