FACTORS AFFECTING CAPITAL STRUCTURE CHOICE: NEW EVIDENCE FROM TURKISH NON-FINANCIAL LISTED COMPANIES

Yıl 2019, Cilt: 8 Sayı: 1, 53 - 70, 30.03.2019

Eyup Basti Nizamettin Bayyurt

https://doi.org/10.17261/Pressacademia.2019.1015

Öz

Purpose - Factors affecting capital structure choices of Turkish non-financial listed companies are tested in this study. We investigate the relation between firm leverage and firm level variables, expected inflation and GDP growth rates.

Methodology - We used annual data of exchange listed non-financial corporations in addition to expected inflation and GDP growth rates. We applied panel regression models to our panel data set of 292 firms.

Findings - We found four factors, i.e. profitability, growth (MVA/BVA), tangibility and industry median leverage are effective in explaining capital structures of Turkish listed firms. While profitability and growth have signs in line with the prediction of the pecking order theory, signs of tangibility and industry median leverage favor the trade off theory. We also divided our sample into clusters based on firm size and 2000 – 2001 financial crisis and repeated the analysis.

Conclusion- Results of this analysis suggest that trade off theory explains better the financing behavior of large-sized firms. Pecking order theory seems to better account for financing behaviors of Turkish firms before 2002; and trade off theory seems to explain better their capital structure choices after the 2000 – 2001 financial crisis.

Anahtar Kelimeler

Trade off theory, pecking order theory, firm leverage, non-financial firms, Turkey

Kaynakça

• Acaravcı, S. K. (2014). The determinants of capital structure: Evidence from the Turkish manufacturing sector. International Journal of Economics and Financial Issues, 5(1), pp.158-171.
• Asterious, D. (2006). Applied econometrics: A modern approach using Eviews and Microfit. Palgrave Macmillan.
• Bayrakdaroglu, A., Ege, I., Yazici, N. (2013). A panel data analysis of capital structure determinants: empirical results from Turkish capital market. International Journal of Economics and Finance, 5(4), pp.131-140.
• Borsa Istanbul Daily Bulletin (online). (December 31, 2014). Available at: http://borsaistanbul.com/en/data/data/equity-market-data/bulletin-data.[Accesed in April 2015].
• Brealey, R. A., Myers, S. C., Marcus, A. J. (2009). Fundamentals of corporate finance, Sixth Edition, McGraw-Hill.
• Bradley, M., Jarrell, G. A., Kim, E. (1984). On the existence of an optimal capital structure: theory and evidence. The Journal of Finance, 39(3), pp.857-878.
• Capital Markets Board of Turkey, Monthly Statistics Bulletin. (December 2014). Available at: http://www.spk.gov.tr/apps/aylikbulten/index.aspx?submenuheader=-1. [Accesed in May 2015].
• Chen, D. H., Chen, C. D., Chen, J., Huang, Y. F. (2013). Panel data analyses of the pecking order theory and the market timing theory of capital structure in Taiwan. International Review of Economics & Finance, 27, pp.1-13.
• Demirhan, D. (2009). Sermaye yapisini etkileyen firmaya özgü faktörlerin analizi: IMKB hizmet firmalari uzerine bir uygulama. Ege Academic Review,9(2), pp.677-697.
• Fischer, E. O., Heinkel, R., Zechner, J. (1989). Dynamic capital structure choice: Theory and tests. The Journal of Finance, 44(1), pp.19-40.
• Frank, M. Z., Goyal, V. K. (2003). Testing the pecking order theory of capital structure. Journal of Financial Economics, 67(2), pp.217-248.
• Frank, M. Z., Goyal, V. K. (2007). Trade-off and pecking order theories of debt. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=670543. [Accesed in February 2015].
• Frank, M. Z., Goyal, V. K. (2009). Capital structure decisions: which factors are reliably important?. Financial Management, 38(1), pp.1-37.
• Frydenberg, S. (2004). Determinants of corporate capital structure of Norwegian manufacturing firms. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=556634. [Accesed in February 2015].
• Gönenç, H. (2003). Capital structure decisions under micro institutional settings: the case of Turkey. Journal of Emerging Market Finance, 2(1), pp.57-82.
• Gülşen, A. Z., Ülkütaş, Ö. (2012). Sermaye yapisinin belirlenmesinde finansman hiyerarşisi teorisi ve ödünleşme teorisi: İMKB sanayi endeksinde yer alan firmalar üzerine bir uygulama. Uluslararası Yönetim İktisat ve İşletme Dergisi, 8(15), pp.49-59.
• Harris, M., Raviv, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), pp.297-355.
• Hausman, J. (1978). Specification tests in econometrics. Econometrica, 46, pp.1251–1271.
• Ho, O. C. (2004). Determinants of foreign direct investment in China: a sectoral analysis. Department of Economics, University of Western Australia.Available at: http://www.web.uwa.edu.au/__data/assets/pdf_file/0019/102556/04_18_Ho.pdf. [Accesed in April 2015].
• Korajczyk, R. A., Levy, A. (2003). Capital structure choice: macroeconomic conditions and financial constraints. Journal of Financial Economics, 68(1), pp.75-109.
• Korkmaz, T., Albayrak, A. S., Karataş, A. (2007). Hisse senetleri İMKB’de işlem gören KOBİ’lerin sermaye yapisinin incelenmesi: 1997–2004 dönemi. Iktisat Isletme ve Finans, 22(253), pp.79-96.
• Köksal, B., Orman, C., Oduncu, A. (2013). Determinants of capital structure: evidence from a major emerging market economy. Working Paper. Available at: http://ssrn.com/abstract=2212648. [Accesed in March 2015].
• Kraus, A., Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. The Journal of Finance, 28(4), pp.911-922.
• MacKie-Mason, J. K. (1990). Do taxes affect corporate financing decisions?. The Journal of Finance, 45(5), pp.1471-1493.
• Modigliani, F., Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), pp.261-297.
• Modigliani, F., Miller, M. H. (1963). Corporate income taxes and the cost of capital: a correction. The American Economic Review, 53(3), pp.433-443.
• Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance, 39(3), pp.574-592.
• Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), pp.81-102.
• Myers, S. C., Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), pp.187-221.
• Myers, S. C., Read Jr, J. A. (2012). Real options, taxes and financial leverage (No. w18148). National Bureau of Economic Research. Available at: http://www.nber.org/papers/w18148.pdf. [Accesed in June 2015].
• Sayılgan, G., Karabacak, H., Küçükkocaoğlu, G. (2006). The firm-specific determinants of corporate capital structure: evidence from Turkish panel data. Investment Management and Financial Innovations, 3(3), pp.125-139.
• Schoubben, F., Van Hulle, C. (2004). The determinants of leverage; differences between quoted and non-quoted firms. DTEW Research Report, 0450, pp.1-32.
• Shyam-Sunder, L., Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51(2), pp.219-244.
• Titman, S., Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), pp.1-19.
• Tong, G., Green, C. J. (2005). Pecking order or trade-off hypothesis? evidence on the capital structure of Chinese companies. Applied Economics,37(19), pp.2179-2189.
• World Federation of Exchanges Website. http://www.world-exchanges.org/statistics/monthly-reports, April 18, 2015. [Accesed in January 2015].
• Yıldız, M. E., Yalama, A., Sevil, G. (2009). Sermaye yapisi teorilerinin geçerliliğinin test edilmesi: panel veri analizi kullanilarak İMKB-imalat sektörü üzerinde ampirik bir uygulama. Iktisat Isletme ve Finans, 24(278), pp.25-45.
• The World Bank Website. http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG. [Accesed in January 2015].
• Turkish Statistical Institute Website. http://www.tuik.gov.tr/PreTablo.do?alt_id=1014. [Accesed in January 2015].
• Central Bank of Republic of the Turkey, Electronic Data Delivery System. http://evds.tcmb.gov.tr/. [Accesed in January 2015].