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The Effect of International Trading Activities of Firms on Their Financial Structure

Author

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  • Sinan Esen
  • Halil Simdi
  • Oylum Sehvez Erguzel

Abstract

This study aims to find out the impacts of international trading activities of firms on the their capital structure and profitability by using panel data analysis of the manufacturing companies listed in Istanbul Stock Exchange (ISE) for the period of 2009–2014. For this purpose we analyzed 107 manufacturing firms that declared international trade and financial data figures. We observed an inverse effect of import level on the long-term debt ratio and the negative impact of export level on the profitability. Every one-unit increase in import ratio decreases long term debt ratio by 0.0764, and every one-unit increase in export ratio decreases profitability by 0.0517. According to empirical findings there is no effect of import level on the short-term debt ratio, shareholder equity ratio and profitability. At the same time there is no effect of export level on the long term debt ratio, short term debt ratio and shareholder equity ratio.

Suggested Citation

  • Sinan Esen & Halil Simdi & Oylum Sehvez Erguzel, 2016. "The Effect of International Trading Activities of Firms on Their Financial Structure," International Business Research, Canadian Center of Science and Education, vol. 9(6), pages 1-9, June.
    • Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:6:p:1-9
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    References listed on IDEAS

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    4. Singh, Kuljot & Hodder, James E., 2000. "Multinational capital structure and financial flexibility," Journal of International Money and Finance, Elsevier, vol. 19(6), pages 853-884, December.
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    7. Singh, Manohar & Nejadmalayeri, Ali, 2004. "Internationalization, capital structure, and cost of capital: evidence from French corporations," Journal of Multinational Financial Management, Elsevier, vol. 14(2), pages 153-169, April.
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    Cited by:

    1. Camélia TURCU & Mihai MUTASCU & Albert LESSOUA, 2020. "Firms’ Performance and Exports: The Case of Romanian Winemakers," LEO Working Papers / DR LEO 2747, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    2. Azize Esmeray & Murat Esmeray, 2016. "The Relationship Between Profit and Export Performance Revisited: Evidence from Turkish Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1035-1037.
    3. Albert Lessoua & Mihai Mutascu & Camélia Turcu, 2018. "Financial performance and exports: the case of Romanian winemakers," Working Papers 2018.07, International Network for Economic Research - INFER.

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    More about this item

    Keywords

    capital structure; export level; import level; international trade; profitability;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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