The impact of capital structure decisions in BRICS countries and Turkey on the financial performance of companies

The aim of this study is to investigate the relationship between capital structure decisions and financial performance of manufacturing firms operating in the BRICS countries and Türkiye. The dataset used in the study consists of the financial data covering the period 2014–2023 of the top twenty firms, selected based on total assets, among the manufacturing companies listed on the stock exchanges of the respective countries. Two different analytical methods were employed in the study. In the first stage, models were constructed and estimations were conducted within the framework of dynamic panel data analysis using the System GMM method, taking into account the dynamic structure of the models. In these models, return on assets (ROA) and price-to-earnings ratio (P/E) were specified as dependent variables, while long-term debt to total assets (LTD/TA), total debt to total assets (TD/TA), and total debt to equity (TD/TE) were included as independent variables. Firm size and real interest rate were incorporated into the models as control variables. To address potential violations of classical assumptions, Driscoll–Kraay standard errors were employed in the estimations. The empirical findings indicate that there are negative and statistically significant relationships between capital structure decisions and firms' financial performance. In the second stage, a financial performance ranking for the BRICS countries and Türkiye was constructed using the Entropy-weighted TOPSIS method. According to the results, Russia was identified as the country with the highest performance score, whereas India had the lowest performance score. Although the performance levels of the countries were found to be relatively close to each other, the differences were sufficient to allow for a meaningful ranking among them. Keywords: Capital Structure, Financial Performance, BRICS-T Countries, System-GMM, Driscoll-Kraay, Entropy Weights, TOPSIS.