(The Short- and Long-Term Effect of Different Capital Structure on Internationalization)

Abstract

Purpose – The aim of this study is to investigate the effect of different source elements which constitute the capital structure of firms on export performance in short and long term. Design/methodology/approach – The aggregated balance sheet data obtained by aggregating the financial statements of the Weaving, Apparel and Leather Sector companies listed on the BIST were used. The short and long term relationship was estimated with ARDL and Error Correction Model. Findings – While the different source elements, which are expressed as short-term liabilities, long-term liabilities and equity ratios, do not have a significant effect on the internationalization levels of enterprises in the short term, however, the increase in the share of short-term and long-term liabilities in total resources negatively affects the internationalization of enterprises in long term. It was determined that the increase of the share of equity in the total resource had a positive effect on internationalization of enterprises in long term. Discussion – In the long term, there is a negative relationship between the short-term borrowing rate and long-term borrowing rate and internationalization levels of enterprises; There is a positive relationship with equity ratio. The increase in both short-term and long-term borrowing rates for Woven Weaving, Apparel and Leather Sector companies imposes financial obligations on these companies and in this case decreases the expected cash flows and internationalization possibilities for managers.On the other hand, the increase in the share of equity in the total resource affects the internationalization positively.Therefore, the sector in question needs to plan its internationalization plans based on equity financing.