IDEAS home Printed from https://ideas.repec.org/a/ris/buecrj/0270.html
   My bibliography  Save this article

Financial Distress and Capital Structure Decision: An Aplication on BIST 100 Firms

Author

Listed:
  • Turaboğlu, Tuncay Turan

    (Mersin University)

  • Erkol, Aslı Yıkılmaz

    (Mersin University)

  • Topaloğlu, Emre Esat

    (Mersin University)

Abstract

This study aims to reveal the relationship between capital structure decisions and financial distress of the firms. In the study, the financial distressed are represented by the variables, Altman Z-Score and Springate S-Score while the capital structure decisions are represented by maturity structure of external debt and the equity capital ratio. The variables, namely firm size and the ratio of fixed assets are incorporated as control variables in the analysis. The results indicate a negative and significant relationship between financial distress and debt and equity ratios, namely total debt, short-term debt and equity ratios. The negative relationship between the external equity ratio (new equity issuance) and the financial failure score supports the Myers (1984) Pecking Order Theory. Moreover, a positive and statistically significant relationship is found between the control variables and financial success scores. The results of the study are consistent with the evidence of other studies and trade off theory that shows the debt ratio increases the probability of financial distress of the firms.

Suggested Citation

  • Turaboğlu, Tuncay Turan & Erkol, Aslı Yıkılmaz & Topaloğlu, Emre Esat, 2017. "Financial Distress and Capital Structure Decision: An Aplication on BIST 100 Firms," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 8(2), pages 247-258, April.
    • Handle: RePEc:ris:buecrj:0270
    as

    Download full text from publisher

    File URL: http://www.berjournal.com/financial-distress-and-capital-structure-decision-an-aplication-on-bist-100-firms
    File Function: Full text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sunday Nosa UGBOGBO (Ph.D) & Sunday Nosa UGBOGBO (Ph.D), 2023. "Capital Structure and Corporate Financial Distress of Quoted Non-Financial Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 1302-1314, June.

    More about this item

    Keywords

    Financial Distress; Capital Structure Decision; Altman Z-Score; Springate S-Score; Borsa İstanbul;
    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
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:buecrj:0270. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adem Anbar (email available below). General contact details of provider: https://edirc.repec.org/data/iiulutr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.