(A Research on the Financial Ratios Affecting Market Price of Venture Capital Invesment Trusts)

Abstract

Purpose – The pupose of this study is to forecast financial ratios related with venture capital investment trust’s market prices in Turkey. In order to get this purpose, an analysis was performed for the years between 2012-2017, by using yearly data of 7 venture capital investment trusts in Turkey. Design/methodology/approach – Panel Data Analysis are used as methods, market price is used as dependent variable and venture capital investments, security investments, cash, equity, long term debt, price / earning, earnings per share and market value/book value ratios are used as independent variables. Findings – By doing panel data analysis, it is obtained that venture capital investments, equity, earnings per share and market value/book value ratios have positive significant relations with the price of venture capital investment trusts, but security investments, cash, long term debt and price/earning ratios have no significant relation with the price. Discussion – Increasing investment ratio of venture capital investment trusts (VCIT) increases market price of their shares. Because of high profit expectation from investment of VCIT, demand for the stocks of VCIT increases and their prices rise. Increasing equity ratio increases market price of stocks. Because, when the firms have more equity, they become more resistant against the economic crisis. This situation increases demand for the stocks and their prices rise. Increasing earning per share, increases market price of the stocks. Because, increase of earning per share means that profitability of the firm rises. This situation increases demand for the stocks of VCIT and price of the stocks rises. Increasing market value/book value ratio increases market price of the stocks. Because, the increase of market value/book value ratio means that expected profitability of the the firm is high and this situation increases demand for the stocks of VCIT and price of the stocks rises.