Financial Structure and Performance of the Turkish Textile Companies

ABSTRACT: Financial structure decisions determine not only the rate of return which shareholders would receive, but the ability of a corporation to be survived in the presence of recession. In other words, the impact of financial structure of a corporation on its financial performance is undeniable. Currently, Turkish textile and apparel industry is recognized as not only an economic development factor, but also a global leading manufacturer and exporter. The main aim of this study is to investigate the financial structure and performance of a sample of textile companies in Turkey by evaluating their financial structure and determining the factors affecting their financial performance. This study is mainly focused on the textile, clothing and fashion industry because this industry plays a major role in the Turkish economy. Therefore, a sample of 16 companies from 1999 to 2012 is gathered from Thomson Reuters DataStream. Then, a panel data study is designed to investigated the factors affecting financial structure and performance of these firm according to the literature. The findings of this study reveal that return on assets (ROA) of the companies in the sample are affected by the changes in the company size and taxation benefits or tax shield provided by depreciation. Both company size and taxation benefits represented a negative relationship toward ROA. Keywords: Financial structure, return on assets, panel data analysis, textile companies, Turkey. …………………………………………………………………………………………………………………………