How does size affect capital expenditures? Evidence from Borsa Istanbul

This study aimed to examine the effect of size on capital expenditures and observe how crises affect the capital expenditures of companies of different sizes. The panel-data estimation procedure was conducted as the main method to test the hypotheses. To ensure the robustness of the main estimation results, we employed a quintile estimation procedure based on the size of each firm/year. In addition, we re-ran the model for crisis years. As a secondary robustness test, we used a non-parametric regression. We also utilized the quantile regression as a non-parametric test of our model. Size, market capitalisation, and tangibility positively affect capital expenditure investments. In contrast, dividend payments reduce capital expenditures. We observed material differences depending on the company size. Our empirical evidence also showed that crises affected the variables in terms of the significance and magnitude of coefficients. Our secondary robustness test with quantile regression illustrated that size loses its significance for investors’ highest capital expenditure. This paper contributes to corporate finance by providing insight into the effect of size on capital expenditures from an emerging market. It is the first to investigate how different size levels and crises affected Turkish listed companies’ capital expenditures. Robustness tests also support the results.