Author
Ozdemir, Ozgur
Publication Date
2016-12
Publication Place
-
Marmara University
Subject
Leverage ratio, Investments ratio, Growth opportunity
Type
Periodical
Language
Turkish
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
2149-1844
Record ID
dbb204d5-df95-423e-bfa3-d88afa05c770
Library Location
Hotel Management
Date
2016-12
Sample Text
The aim of this study is to determine whether the financial leverage ratio affects the investments of companies.
To examine specifically the companies operating in Turkey and to review the investments-leverage ratio literature.
To contribute with the example of a developing country. For this purpose, its shares were evaluated between 1994 and 2014.
Using 1,681 company-year data of 246 companies traded and/or currently traded on Borsa Istanbul,
The leverage ratio-investments ratio relationship was examined with a fixed effects regression model. of the study
data is prepared by Wharton Research Data Services, an international data provider.
It was taken from two databases: Compustat and Center for Research in Security Prices (CRSP).
The findings of the analysis show that there is a negative relationship between leverage ratio and investments.
and this negative relationship is felt more severely in companies with low growth capacity.
These findings, in line with capital structure theories, show that companies operate with high debt ratios.
Turkish companies that continue to grow are unable to make new investments and therefore their current growth
revealed that they could not benefit from the opportunities. Additionally, the results of the study indicate low growth
In companies that have capacity and continue their activities with high leverage, leverage is the ratio of free cash.
It acts as a shield that prevents managers from transferring money to investments that promise insufficient growth.
It supports the theory that he is playing. These findings are generally in line with the findings in the international literature.
The purpose of this research is to examine whether financial leverage affects Turkish firms' investments and to contribute to the international leverage-investment literature by providing evidence from an emerging market. In order to test the alleged relationship, 246 Turkish firms, whose shares were traded at Borsa Istanbul between 1994 and 2014, has been used as the sample of the study. 1,681 firm-year data have been gathered from the Compustat and Center for Research in Security Prices (CRSP) databases that are maintained by the Wharton Research Data Service, a leading international data provider. Fixed-effect regression analysis is used as the analysis method. The findings of the study suggest a negative relationship between leverage and investments, and this negative relationship is more prominent for firms with low growth opportunities. In accordance with many capital structure theories, findings of the current study imply that highly-levered Turkish firms are unable to take advantage of investment opportunities for growth. Moreover, the current findings support the notion that leverage acts a protective shield to prevent the managers of Turkish firms with low growth opportunities from channeling free cash flows towards poor projects with insufficient growth prospects. The current study's findings are, in general, consistent with the findings of other studies reported in international literature.
Cilt
38
