The concept of tax shield and its impact on capital structure decisions

This study aims to investigate the impact of the tax shield on corporate capital structure decisions. A tax shield is a significant financial advantage that reduces a company's tax burden by deducting interest expenses incurred through borrowing. The factors affecting capital structure decisions are examined at both micro and macro levels. At the micro level, company-specific dynamics such as profitability, asset structure, and liquidity were analyzed. At the macro level, the effects of inflation rate, interest rate, and Gross Domestic Product (GDP) growth rate were evaluated. In the study, panel data analysis is used to analyze the financial data of the companies in the Borsa Istanbul 30 index for the period 2016-2023. The findings reveal that the tax shield plays a decisive role, particularly in borrowing strategies, and its effect varies depending on sectoral and economic differences. As a result, tax shield applications are found to be a critical factor in optimizing corporate financial decisions, offering significant implications for both managers and policymakers. Keywords: Tax shield, capital structure, panel data analysis, financial strategy.