Economic growth and direct foreign investments for Borsa i̇stanbul companies

The source of growth for sustainable growth is generally seen as investments. The main problem of economic growth-oriented economic policies is the inability to achieve the desired growth targets due to insufficient investments. For this reason, no matter how much the public and private sector investments for a country, the penetration of foreign countries into the country will be a very important factor in achieving the growth targets. In Turkey, the investments of the firms operating in Borsa Istanbul (BIST), which are the institutions that gather capital markets under a single roof, consist of investments of domestic and foreign investors. Foreign investments are made in two ways as indirect and direct investment. Indirect investment consists of portfolio investments that are realized by way of capital stock, bond purchase without making any physical investment. Direct investment is the presence of foreign investors in physical investments (plant, factory etc.) within the borders of the country. Foreign direct investments are more permanent than indirect investments. It also shows direct investments, technology transfer, employment provision, competition enhancement and direct impact on economic growth. Therefore, direct investments have an important place in economies. In this study, it has been investigated whether economic growth and foreign direct investments have an effect on the market value / book value (PD / DD) ratio of selected companies operating in the production area in BIST 100 index. 54 selected firms were included in this study. The data of the study was used between 2008: 04-2018: 04 and quarterly data were used. Data were analysed with the method of appropriate estimation by the Panel Data Regression Analysis method. As a result of the analysis, it was determined that economic growth had a positive effect on the ratio of PD / DD and foreign direct investments had a negative effect.