Welcome to the InfoSci Platform
The Impact of Firm Specific Factors on Capital Structure: Empirical Evidence from Turkey

The Impact of Firm Specific Factors on Capital Structure: Empirical Evidence from Turkey

Mehtap Öner
Copyright: © 2014 |Volume: 1 |Issue: 2 |Pages: 21
ISSN: 2334-4628|EISSN: 2334-4636|EISBN13: 9781466662117|DOI: 10.4018/ijcfa.2014070101
Cite Article Cite Article

MLA

Öner, Mehtap. "The Impact of Firm Specific Factors on Capital Structure: Empirical Evidence from Turkey." IJCFA vol.1, no.2 2014: pp.1-21. http://doi.org/10.4018/ijcfa.2014070101

APA

Öner, M. (2014). The Impact of Firm Specific Factors on Capital Structure: Empirical Evidence from Turkey. International Journal of Corporate Finance and Accounting (IJCFA), 1(2), 1-21. http://doi.org/10.4018/ijcfa.2014070101

Chicago

Öner, Mehtap. "The Impact of Firm Specific Factors on Capital Structure: Empirical Evidence from Turkey," International Journal of Corporate Finance and Accounting (IJCFA) 1, no.2: 1-21. http://doi.org/10.4018/ijcfa.2014070101

Export Reference

Mendeley
Favorite Full-Issue Download

Abstract

The main aim of this study is to analyze the impact of firm specific factors on corporate capital structure decisions of firms. The analysis is based on the year end observations of 100 firms which are among the top 1000 industrial enterprises listed on Borsa Istanbul for the period 2005-2011. By using panel data methodology, five explanatory variables: tangibility, profitability, firm size, non-debt tax shields and growth opportunities are evaluated as the firm specific determinants of capital structure decisions. The leverage ratio which is the dependent variable of the analysis is used as the proxy of firms' capital structure. In order to test whether crucial results are robust to alternative leverage definitions, this study measures leverage as the firm's total debt to total asset and long term debt to total asset ratios by focusing both on book and market based measures. The major findings of the study with respect to financing decisions of firms provide significant and positive impact of tangibility on long term debt ratio, however it turns out to be inverse for total debt ratio. In addition, it is found that profitable firms tend to have lower leverage; and larger companies tend to have higher debt ratios compared to small ones. What is more, evidence support that firms with greater growth opportunities and non-debt tax shield reveal inverse relation with debt level. Except the impact of growth opportunities which is only significant for market based leverage ratios, the findings for all other variables are robust for different definitions of leverage.

Request Access

You do not own this content. Please login to recommend this title to your institution's librarian or purchase it from the IGI Global bookstore.