Determinants of capital structure: An application on Participation 30 Index firms

Capital structure decisions are critical in terms of preserving and consolidating the companies financial state and effectively continuing their operations. The decision of companies regarding how much debt and how much equity to cover their capital structures has a substantial impact on company value and capital cost. In this regard, it is aimed to determine the capital structure determinants of the 17 real sector companies operating in the Participation 30 Index and whose debt levels must be retained at a specific level in order to be included in the indexwith panel data analysis in the period of 2011 and 2020. In the analysis of the study, financial leverage, non-debt tax shield, size, operating leverage, liquidity ratio, return on assets and fluctuation in sales were included as independent variables. As a result of the analysis no statistically significant relation of the financial leverage to the non-debt tax shield and sales fluctuations was discovered. A statistically significant and positive relationship was found between the size, operating leverage, and financial leverage, while a statistically significant and negative relationship was found between the liquidity, return on assets and the financial leverage. In this context, it can be noted that the companies trading on the Participation 30 Index make capital structure decisions based on the representation, influence of the emphasis, and the financial hierarchy theories.