(The Relationship Between Capital Structures and Company Values of Companies - An Application in the BIST Industrial Index)

Abstract

Purpose: The existence and direction of the relationship between capital structure and firm value is one of the most debated issues in the financial world. This research was conducted to determine whether there is any relationship between the capital structure and firm value of the firms and, if any, the level and direction of this relationship. Design/methodology/approach: The sample of the study consisted of 111 companies whose data can be accessed from the companies operating in Borsa Istanbul (BIST XUSIN) Industrial Index. The data related to the companies subject to the research were taken from the official web addresses of Borsa İstanbul and the Public Lighting Platform and made ready for analysis by the researchers. Descriptive statistics, correlation analysis, panel unit root tests and panel regression analyzes were performed to achieve the aim of the study. Findings: As a result of the study, it was concluded that there was a positive correlation between the Active Profitability Ratio (AKO) and KVYK/TA and ÖZ/TA ratios, while a negative correlation was found between UVYK/TA and LNTB/ÖZ ratios. It has been concluded that there is a negative relationship between the return on equity (ÖKO) and the ratios of UVYK/TA, LNTB/ÖZ and TB/TA. It has been concluded that there is a positive correlation between the Profit Per Share (HBKO) ratio and the ÖZ/TA ratio, while there is a negative relationship between the KVYK/TA, UVYK/TA, LNTB/ÖZ and TB/TA ratios. Discussion: According to these results, it can be stated that capital structure ratios of firms affect the ratios representing firm values and established models give meaningful results. It has been determined that the use of debt in the capital structures of the firms included in the Borsa Istanbul Industrial Index adversely affects the firm value and the use of equity positively affects the firm value.