Determinants of financial distress in manufacturing sector companies traded on Borsa Istanbul

Financial distress is a situation in which a business is unable to provide the resources necessary to continue its operations as a result of a weakening of its debt repayment capacity, deterioration of its financial structure, decline in profitability, liquidity problems, and insufficiency of its assets to meet its financial obligations. Financial distress in businesses can lead to outcomes such as bankruptcy, liquidation or restrictions on operations. Therefore, early detection of financial distress is of critical importance for both business management and investors. In this context, analyzing financial distress indicators and the factors affecting them contributes to healthier and more accurate decision-making in financial markets. The aim of this study is to identify the factors affecting the financial distress of companies operating in the manufacturing sector on the Borsa İstanbul between 2014-2023. The Altman Z score and Springate S score models were used as dependent variables in determining financial distress. Financial ratios such as the Beneish M score, ROIC, ROCE, ROA, ROE, ME ratio, PE ratio, firm size, leverage ratio, fixed asset ratio and asset turnover ratio were included in the model as independent variables and panel data regression analysis has been conducted. In addition, companies were classified into three groups according to the Altman Z score: "successful," "uncertain," and "unsuccessful." According to the Springate S score, companies were classified into two groups: "successful" and "unsuccessful," and separate regression analyses were conducted for each group. The results of all regression analyses indicate that all variables except the Beneish M score have statistically significant effects on companies' financial failure status.