(The Relationship Between Financial Ratios and Risk (Beta): The Case of BIST)

Abstract

Purpose – The calculation of the risk of stocks that affect companies, investors and the economies of countries has been a subject that keeps its importance as it did in the past and transfers this importance to the future. For this reason, it has been aimed in the study to determine whether there is a relationship between the financial ratios and systematic risks of companies operating in the manufacturing industry which is one of the leading sectors of the economy and whose shares are traded on BIST, and also to determine what the direction of this relationship is if there is a relationship. Design/ Methodlogy/Approach – In the study, the relationship of 109 companies, operating in manufacturing sector and traded in BIST between the years of 2010 and 2018, between financial ratios and systematic risk calculated by taking their annual data into account were examined with correlation analysis, simple linear regression analysis and multiple linear regression analysis. Findings – As a result of the analysis, while a significant same directional relationship or a significant opposite directional relationship was found between some financial ratios and systematic risk, no significant relationship between some financial ratios and systematic risk was not seen. As a result of the analysis used in the research, it was also determined that the existence, direction and degree of the relationship between financial ratios and systematic risk varied by years. Discussion – When the literature is examined, it has been observed that different results and effects are obtained because the rates used in researches, sectors, analysis methods, companies, periods and countries are different. In this context, it was found that the findings obtained from the analyzes support both domestic and foreign literature in general.