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The Impact of Ownership Structure on Capital Structure of Manufacturing Firms: Evidence from the ISE (1998-2009)

Author

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  • Guven Sayilgan
  • Yahya Sayman

Abstract

In this study, the impact of capital structure on firms’ ownership structure is examined. Therefore, manufacturing firms whose stocks are quoted on the Istanbul Stock Exchange (ISE) over the period 1998 and 2009 are covered using pooled data. On the developed model, it was investigated how ownership structure is affected by the capital structure. According to the results of the regression model, it has been found that firms which have less shareholders choose higher-risk capital structures because of increasing firm value. Furthermore, provided that capital intensity becomes higher, firms must hire professional managers. In this instance, professional managers prefer equity financing for preventing financial distresses. In summary, this study concludes that firms’ ownership structure affects capital structure.

Suggested Citation

  • Guven Sayilgan & Yahya Sayman, 2012. "The Impact of Ownership Structure on Capital Structure of Manufacturing Firms: Evidence from the ISE (1998-2009)," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 12(48), pages 1-12, January.
    • Handle: RePEc:bor:iserev:v:12:y:2012:i:48:p:1-12
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    File URL: http://www.borsaistanbul.com/datum/imkbdergi/EN/ISE_Review_48.pdf
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    More about this item

    Keywords

    Capital structure; ownership structure; agency theory.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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