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Capital Structure and Firm Performance: An Analysis of Manufacturing Firms in Turkey

Author

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  • Abdulkadir Ali Tifow

    (Anadolu University, Turkey)

  • Ozlem Sayilir

    (Anadolu University, Turkey)

Abstract

Capital structure is one of the most important issues for firms in order to achieve better financial and market performance. The main objective of this study is to examine the relationship between capital structure and firm performance. We investigate 130 manufacturing firms listed on Borsa Istanbul for the period of 2008-2013 using panel data analysis. We utilize short term debt to total asset (STDTA) and long term debt to total asset (LTDTA) as proxies of financial leverage (independent variables). Return on equity (ROE), return on asset (ROA), earnings per share (EPS) and Tobin"s Q ratio were used as proxies of firm performance (dependent variables). Sales growth rate and firm size were used as control variables in the study. We find that STDA has a significant negative relationship with ROA, EPS and Tobin"s Q ratio. Besides, we find that LTDTA has a significant negative relationship with ROE, EPS and Tobin"s Q ratio, while it is positively and significantly correlated with ROA.

Suggested Citation

  • Abdulkadir Ali Tifow & Ozlem Sayilir, 2015. "Capital Structure and Firm Performance: An Analysis of Manufacturing Firms in Turkey," Eurasian Journal of Business and Management, Eurasian Publications, vol. 3(4), pages 13-22.
    • Handle: RePEc:ejn:ejbmjr:v:3:y:2015:i:4:p:13-22
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    References listed on IDEAS

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    Cited by:

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    5. David Haritone Shikumo & Oluoch Oluoch & Joshua Matanda Wepukhulu, 2020. "Effect of Short-Term Debt on Financial Growth of Non-Financial Firms Listed at Nairobi Securities Exchange," Papers 2011.03339, arXiv.org.
    6. Maryam Isyaku Muhammad & Mohammed Abubakar & Mohammed Mahmud Kakanda & Muhammad Abdul Abubakar, 2020. "The dynamics of capital structure and firm value of listed industrial goods in Nigeria," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 10(7), pages 184-193, July.
    7. Stephanie M. Chondough, 2022. "The Effect Of Capital Structure On Earnings Per Share Of Publicly Traded Companies: A Review Of Related Literature," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 7(special), pages 111-119, June.
    8. Md. Ataur Rahman & Md. Sadrul Islam Sarker & Md. Joyen Uddin, 2019. "The Impact of Capital Structure on the Profitability of Publicly Traded Manufacturing Firms in Bangladesh," Applied Economics and Finance, Redfame publishing, vol. 6(2), pages 1-5, March.

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